Senate Approves Safeguard of State Finances
JUNEAU – The Alaska State Senate unanimously approved a measure today safeguarding the state’s financial position.
Senate Bill 97, sponsored by the Senate Finance Committee, halves the governor’s ability to issue pension obligation bonds, from $5 billion down to $2.5 billion.
The legislation also requires the administration to submit a proposal to issue pension obligation bonds to the Legislative Budget & Audit Committee. This additional step ensures the Legislature is part of the process and has ample opportunity to exercise its oversight role.
“Given the state’s continued fiscal challenges, it is important we tighten our statutes to manage the tools in our toolbox,” said Sen. Anna MacKinnon (R-Eagle River), co-chair of the Senate Finance Committee. “I appreciate the administration’s support of this legislation and look forward to a collaborative process between our two branches of government should pension obligation bonds be issued in the future.”
Pension obligation bonds, when used properly, can reduce the amount the state has to spend in order to pay off pension liabilities. Issuing pension obligation bonds, however, can have consequences to the state’s credit rating and overall financial standing, warranting additional legislative review.
SB 97 is now on its way to the Alaska House of Representatives.
The bill’s passage does not reflect an intent of support by the Senate for issuing pension obligation bonds.