Senate bill imposes five-year moratorium on school debt reimbursement
Just as Anchorage voters are being asked to approve a $59 million school construction bond, a bill cleared the Senate on Wednesday that might chill enthusiasm for passage.
It’s been a long-standing policy for the state to reimburse school districts for a large share of school construction costs, but the Senate passed Senate Bill 64, a measure that would put payments on hold for five years.
Although the bill must still must go through the House and get the governor’s signature, it puts Anchorage taxpayers on notice they may have to foot the entire bill for improvements to schools, which include Gladys Wood, Turnagain, Mountain View and Rabbit Creek elementary schools.
It also has a provision, which makes the effective date retroactive, Jan. 1, 2015 — about three months before the Anchorage municipal election on April 7.
Sen. Bill Wielechowski, an Anchorage Democrat, attempted to amend the effective date of the bill.
“This is an unprecedented moratorium. This is an unprecedented action by the Legislature,” Wielechowski said.
“This is a particularly painful bill for the community of Anchorage and for all those communities that have elections before July 1. Anchorage gets hits twice,” Wielechowski said. “Anchorage gets a six-year moratorium, and virtually every other community gets a five-year moratorium.”
Wielechowski had support from only one other Anchorage Democrat, Sen. Johnny Ellis.
“It’s the timing that makes me very uncomfortable,” Ellis said. “A group of elected officials in Juneau from all over the state collectively interfering with an ongoing election in my community — I just think that’s wrong.”
After failing to get the effective date of the bill pushed back to July, Wielechowski argued SB 64 would put the average Anchorage taxpayer, who owns a $340,000 home, on the hook for about $3,000 if the voters approve the school bond.
“I’m not going back to my community and saying, ‘We couldn’t get our house in order, so we want you to pay an extra couple of thousand dollars in property taxes,’” Wielechowski said.
Some Republicans questioned Wielechowski’s math. One even called it “fuzzy” and pointed to another set of numbers the state must deal with soon — a $3.5 billion budget gap for the current fiscal year and a similar amount for the next one.
“We are in unprecedented times, in unchartered waters,” said Anna MacKinnon, co-chair of the Senate finance committee and a sponsor of SB 64.
“We need all Alaskans together on this issue. It’s an issue of fairness.”
MacKinnon said it would be unfair to other school districts to let the Anchorage construction bond squeak by.
Opponents of SB 64 argued it wasn’t fair to Anchorage voters, who have already begun casting ballots in the April 7 election.
But MacKinnon said she had spoken with Anchorage school district officials and warned them that “everything was on the table” in efforts to trim the budget.
“It’s tough times. It’s not something I am cheering about,” MacKinnon said. “I understand why some may accuse us of not being fair. But really, we are trying to be fair to the entire state of Alaska.”
“It’s not about trying to hurt anyone or try to disadvantage anyone. It’s about being fiscally responsible,” MacKinnon said.
The bill was fast-tracked through the Senate on Wednesday, going directly from a second and third reading to a final vote. Usually, this process is spread out over several days.
The final vote was 17 to 2, with three Democrats — Dennis Egan, Donny Olson and Berta Gardner — breaking ranks to vote with the majority.
Gardner said she supported the bill with reservations and believes the Legislature’s focus is misplaced.
“We need to focus on what’s happening on the insides of the building instead of what’s happening on the outsides,” said Gardner, who is pushing to restore cuts to early childhood education.
“I would hope the House would slow it down a bit,” said Rep. Chris Tuck, the House minority leader and a member of the Anchorage caucus, made up of both Democrats and Republicans.
Tuck says there may be pushback from Anchorage voters over the Senate vote and he expects the House to change the bill. With cutbacks to the capital budget, Tuck said, passage of the school bond would help offset the impact to the Anchorage economy — another factor that might be considered as the House considers SB 64.
“We have a very important election in just a few weeks, and I don’t like the fact that this makes this retroactive, nullifying the public’s ability to make a sound decision,” Tuck said.
KTVA attempted to reach the co-chairs of House finance, Mark Neuman and Steve Thompson, but they were unavailable for comment. The bill is scheduled for hearings in the House finance committee on Thursday and Friday afternoons.
Debt reimbursement, as the bill is written now, would resume in 2020, but reduced by 20 percent from the current payments. Currently the state reimburses schools at 70 or 60 percent, depending on the type of construction work done. After 2020, that reimbursement rate would drop to 50 or 40 percent.
Sen. MacKinnon said Wednesday’s overwhelming support for HB 64 was not a victory, but part of a financial reality that would save the state about $118 million a year.
Correction: The date regarding potential debt reimbursement was incorrect in an earlier version of this story. The story has been changed to include the correct information.
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