Senators weigh extending bond debt moratorium

Bond payments could come back, but at lower rates

A bill in the Alaska Legislature could extend the moratorium on school bond debt reimbursement by another five years, but its only sponsor left the Legislature late last month.

House Bill 106 was submitted by Rep. Tammie Wilson, R-North Pole, but Wilson left the Legislature late last month to take a job with the Office of Children’s Services. Her House seat is currently empty, and the bill does not have any co-sponsors.

In a Senate Finance Committee meeting Friday morning, committee co-chair Sen. Natasha Von Imhof, R-Anchorage decided not to move the bill forward, but to hold it for further consideration.

“This is material. As we are creating our budget, we need to resolve this issue so we know what our cash flow is,” Von Imhof said. She said she wanted the committee to look at the bill again within the next two weeks.

The bill would extend the moratorium that began in 2015 and is set to expire in July, another five years to 2025. If the bill does not pass, Alaska school districts could once again apply for debt relief on new bonds but at reduced rates.

Districts are already facing reduced rates for previously issued bonds due to Gov. Mike Dunleavy’s budget vetoes last year.

According to documents prepared by Sen. Natasha Von Imhof’s office, the total estimated bond debt owed by the state to school districts in 2020 is just under $99 million. Under the governor’s vetoes the state is estimated to pay $48 million.

If HB 106 passes into law, any bonds issued by school districts would be paid in full by the local municipality. If it doesn’t pass, any new bonds passed after July 1, will be eligible for reimbursement at 40% or 50%. In the past the state had reimbursed districts at 70% or 80% depending on the project, according to the Department of Education and Early Development.

Juneau City Manager Rorie Watt previously told the Empire a lack of reimbursement from the state would likely lead to higher local taxes as a way of paying back the debt. Watt said the city has the money to pay the debt but would have to tap into its savings account to make the payments.

The City and Borough of Juneau currently has $21 million in debt funding for Fiscal Year 2020, according to DEED. Going forward, the city would take a “minimalist approach” to school maintenance, Watt told the Empire in January.

Von Imhof said the Finance Committee is accepting public comment on the bill. Comments can be submitted by email to: finance.committee@akleg.gov.

• Contact reporter Peter Segall at 523-2228 or psegall@juneauempire.com.

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