Senator Wilken Calls for Capital Budget Reform – Presents Roadmap for Change

Juneau – Sen. Gary Wilken, R-Fairbanks, in a letter to the House and Senate Finance Committee Co-chairs, today formally requested the Finance Committees initiate three key changes to the procedure normally used to develop and pass the State’s capital budget.

“Last year the capital budget process broke down and resulted in the Governor using her veto power, leaving a blemish on the legislature, the administration, and our capital budget process.” Wilken explained. “We need a review of the current capital budget process and ultimately we need to revamp the way our State’s capital budget is built. The three changes to the process that I propose will help the legislature begin that journey.”

The three steps Wilken proposes are

1. establish clear spending limits, agreed upon by the leadership of the Senate and House of Representatives and the Governor,
2. alternate introduction of the capital budget bill each year between the House and the Senate to create a check and balance between the two bodies,
3. reclassify public dollars that do not carry a “General Fund” label, yet in practice spend like general fund dollars in the budget process, and label those funds “Alaska Funds” so they are better identified and tracked when spent.

The three changes Wilken proposes would open the process for more public scrutiny and install needed checks and balances on the system.

Senator Wilken will explain his plan in more detail and make available copies of his letter to the House and Senate Finance Committee Co-chairs at the Republican Minority Caucus press availability today at 11:00 a.m. in the Capitol Building.

Senator Wagoner’s Bill Gives Alaskans $750 Annual Credit on Home Energy Bill

Juneau – Sen. Tom Wagoner, R-Kenai, announced today that he has a sponsor substitute for Senate Bill 217 that will be introduced in the Senate on Friday. The new language in the bill provides every home owner and renter in Alaska a $750 annual credit on their residential electric bill – or $62.50 a month.

“Energy prices are soaring and Alaskan’s need some relief.” Wagoner said. “In addition to provided that relief, my bill goes a step further and sets up the Alaska Energy Council, which will be tasked with preparing an energy plan to address residential, municipal, and rural community energy delivery and needs in the years to come.”

The relief afforded under the bill, SB 217, also called the Alaska Power Cost Reduction Program, will take affect only when oil and gas prices reach the level where the state’s ACES tax progressivity is triggered, about $60 per barrel, and stays at that level for at least 12 consecutive months.

“The reason we had the $750 energy credit kick in when oil and gas prices are high is because that’s when utility costs start to rise and when the Alaskan people most need a break. That is also when the state can most afford to help out residents because state revenues will get a boost from ACES progressivity tax.”

“Let’s use the tax money we get from high oil and gas prices to reduce the negative affects of those high prices” Wagoner explained.

Senate Republican Minority Endorses Use of Pension Obligation Bonds

Juneau – The Senate Republican Minority today united in their support of paying down the State of Alaska’s mounting retirement and pension system debt using a combination of pension obligations bonds and cash.

Pension obligation bonds, also referred to as “POBs,” are issued by a state or municipality to help the government pay down its obligation to a pension and retirement system. In Alaska that debt has reached a staggering $8.6 billion.

“The State of Alaska Department of Revenue has shown that a mixture of cash from our surplus and POB arbitrage is a way to reduce future general fund requirements for our pension obligation for the next 25 years. We should have the courage to spend some of our available cash and incur positive debt.” Sen. Gary Wilken, R-Fairbanks said.

The long term savings would be enjoyed by both the state and municipalities because both pay into the retirement fund for employees who are part of the PERS/TRS system.

The State of Alaska’s Constitution mandates that the State’s PERS/TRS benefits be paid to all eligible state and municipal workers. “This is a debt that cannot be avoided” Sen. Gene Therriault, R-North Pole, explained. “What we are endorsing is not unlike what any one of my constituents might do when refinancing a home. You first look for a mortgage with a better interest rate, pay down as much as you can on the previous debt in cash, and then refinance the remaining balance with a lower interest loan. That’s exactly what we’re endorsing here.”

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