Mental Health Trust Authority defends status

Subport owner disputes Sitka senator, asserts state role

Posted: Tuesday, April 27, 2010

The Alaska Mental Health Trust Authority's executive director said he's surprised that an influential state senator doesn't consider the trust to be part of the state.

The trust is a state corporation, owns state assets, and is managed by the state with the vast majority of our funding coming from state government, said Jeff Jessee, the authority's executive director.

"If that's not being part of the state, I don't know what is," he said.

The issue arose when Sen. Bert Stedman, R-Sitka, said he blocked a legislative proposal for the trust to build an office building on Juneau's waterfront subport property to house employees from the Department of Labor's "Plywood Palace" building and elsewhere because he believed the trust to not be part of the state.

The bill blocked by Stedman had been unanimously approved in the House a year earlier, but failed to progress during the most recent legislative session.

Sen. Dennis Egan, D-Juneau, said it was clear to him that the mental health trust was part of the state.

"How can they not be the state?" he said. "We fund it."

Jessee said that not only is the trust part of the state, but that any profit it makes on developing and leasing the subport property would go back to a state purpose: Providing services to trust beneficiaries.

The trust was created before statehood to manage a million acres of land for the benefit of those needing mental health services, Jessee said.

Much of the land is no longer owned by the state, but the remainder is managed by the trust's land office. The trust's cash is managed by the Alaska Permanent Fund Corporation.

The loss of much of the trust land has resulted in numerous court cases and legal settlements over the years, and is likely responsible for some of the confusion over the trust's status, Jessee said.

Each year, the Legislature passes two separate operating budgets. This year, one was House Bill 302, for the state's mental health programs. The other, House Bill 300, was for everything else.

Stedman voted for House Bill 302 this year, and later served as one of three Senate members on a conference committee which gave the budget final approval.

The separate budget system is set up to ensure that the state's mental health effort is dealt with separately as part of a legal settlement, Jessee said.

The trust has sometimes been called the "fourth branch of government," because of its unusual independent status, Jessee said.

Senate President Gary Stevens, R-Kodiak, said he agreed with Stedman that the trust was not part of state government.

"There's a point to what Stedman says, in a way," Jessee said.

The trust does have some independence from the Legislature, though it is clearly part of the state, he said. The governor appoints the trust's board members, who then have to be confirmed by the Legislature.

What Jessee said he didn't understand was why Stedman chose to block the subport deal for the reason he provided.

Stedman said he wanted the state to get away from leasing private property which it would not own an the end of the lease term.

"The part that somewhat baffles me is that the state routinely makes lease payments to ... finance private buildings," he said.

In the subport deal, the trust would act as a private developer, but in the end the public would benefit.

"In the end the trust owns the building and the revenue is put back in a public purpose," Jessee said.

Instead of the subport property deal, the Legislature instead appropriated $5 million for the Department of Administration to begin looking for and working on a new location for an office building in Juneau.

Jessee said the trust would not want to sell the subport for that purpose.

"We are unlikely to just sell the parcel to them," he said. "With a piece of property like this that has income potential, that would be silly."

• Contact reporter Pat Forgey at 523-2250 or

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