State to share money with cities, boroughs

Under the Senate's plan, Juneau will receive $1.5 million

Posted: Thursday, May 10, 2007

The Alaska Senate on Wednesday passed a revenue-sharing plan to help the state's cities and boroughs. The package was almost as large as Gov. Sarah Palin had proposed.

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Juneau stands to do well under the program, said Sen. Kim Elton. The Juneau Democrat is a member of the Senate Finance Committee which produced the plan.

Elton said the state should have never stopped helping its cities with revenue sharing.

"We did it when the price of oil was in the tank; we should be able to do it now when the price of oil is so high," he said.

Under the Senate's plan, Juneau will receive $1.5 million, along with assistance with retirement costs that bring the total up to $7.5 million.

Total cost to the state for revenue sharing is about $47 million; Palin had earlier proposed $48 million.

The plan was supported by the Alaska Municipal League, said legislative liaison Shana Crondahl.

Senators linked the revenue-sharing plan to state support for cities struggling with rising Public Employee Retirement System costs. The measure doesn't address local school budgets.

The intent was to make sure that there was enough money for communities that don't have employees covered by PERS, said Sen. Lyman Hoffman, D-Bethel, and co-chair of the Finance Committee.

"The communities of Alaska, from the largest to the smallest, are suffering," Hoffman said.

While Juneau will do well under the proposal, some will do better.

Fairbanks has been facing the biggest increase in retirement costs of any city in the state.

Sen. Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee with Hoffman, described the revenue-sharing proposal as a windfall for Fairbanks, because the state will absorb retirement debts for each municipality and average them out.

Fairbanks' gain comes from the fact that the city privatized its municipal utility many years ago.

Fairbanks pocketed profits from the sale but retained the retirement debt the state will now cover.

"Fairbanks is going to have a huge windfall, and a huge dilution of debt," Stedman said.

Some members of the Senate Republican minority raised questions about the plan.

"I'm not sure this is sustainable," said Sen. Tom Wagoner, R-Kenai.

Sen. Gene Therriault, R-North Pole, said the state government already does much for its cities and boroughs, including paying for prosecutors and jails that are the financial responsibility of local governments in most other states.

Therriault also said the program suggested sustainability. He questioned whether the state could afford such aid in the future.

Members of the Senate Working Group, the bipartisan majority that controls the Senate, voted unanimously for the plan, as did one member of the minority, Sen. Gary Wilken, R-Fairbanks. It passed 16-4.

The bill approved Wednesday was Senate Bill 72.

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