KETCHIKAN, Alaska (AP) — State and municipal leaders are in talks to change Alaska’s multi-billion-dollar pension system.
Local leaders attended a meeting last week in Juneau to discuss possible changes to the system that would assign a portion of the system’s debt to municipalities.
A change in national accounting standards requires the state to show the approximately $10 billion in debt on its books. The Alaska Department of Administration in September sent a memo notifying local governments that they would shoulder a portion of that burden.
“By saying it’s not (its) responsibility, the state is essentially saying it’s somebody else’s,” said Scott Brandt-Erichsen, attorney for the borough, “and we don’t agree.”
With the state’s plan, the Ketchikan borough would have an additional $70 million in debt on its books. Anchorage alone would have another $750,000 million in debt.
“If I’m a retiree, I’m going to start thinking there’s something wrong here,” Brandt-Erichsen said of the debt load on municipalities. “Communities don’t have fiscal resources to make these payments.”
Ketchikan leaders argue that the change could change the boroughs bond debt rating and cost taxpayers in the short run.
In a Monday letter to Department of Administration Commissioner Sheldon Fisher, Alaska Municipal League Execute Director Kathie Wasserman said communities would be unwilling to take on more costs and debt from the pension system and asked the Department of Administration to oppose legislation that would negatively impact municipalities.
The Ketchikan Assembly will debate a plan for how to push the issue if the state continues down this course at its January policy session.
The agenda statement for the policy session states that the borough will work with other communities to ensure the state does not pass liabilities to other employers.