House Finance Committee amends budget to halt payments towards school construction, statewide

Published: Apr. 3, 2019 at 7:34 PM AKDT
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The Alaska House Finance Committee approved an amendment to its current version of the operating budget that would stop payments to municipal governments for all school construction costs.

Gov. Mike Dunleavy's draft of the FY2020 budget made the proposal to eliminate school bond debt reimbursement for pre-2015 school debt. A moratorium exists on the state funding debt incurred by municipal governments incurred from Jan. 1, 2015 until July 1, 2020.

The House Finance Committee heard legislation introduced by Rep. Tammie Wilson, R - North Pole,

Michael Barnhill, the policy director at the Office of Management and Budget, told a Senate Finance Committee hearing in February that the inventory of outstanding debt across Alaska's school districts is $900 million.

Rep. Ben Carpenter, R - Nikiski, introduced the amendment for all school bond debt reimbursement in a House Finance Committee meeting Wednesday, saying that lawmakers "must be brave" to make expenditures equal revenues with a $1.6 billion deficit.

The amendment, the fourth considered by the committee Wednesday, would save the state around $99 million in fiscal year 2020.

In FY2019, the current amount for outstanding bonds eligible for participation in the school debt reimbursement program are estimated at around $107.2 million.

Six representatives voted in favor of the measure and five against. Later during the afternoon session, the amendment was briefly rescinded before it was again approved by the committee. Seven representatives voted in favor of the amendment while four voted against.

"Instead of reducing the size of State government, the Governor – and now House Finance – have shifted State obligations to others," wrote Nils Andreassen, the executive director of the Alaska Municipal League, in a press release Wednesday afternoon. "Moreover, they have prioritized some obligations over others, and prioritized some regions of the State over communities for whom cuts mean closed for business."

The current version of the operating budget before House finance is likely to change as amendments are voted on by members in the coming days. Amendments can again be changed by a full vote of the Alaska House of Representatives when the operating budget makes it to the floor.

Anchorage Mayor Ethan Berkowitz posted this reaction to Facebook Tuesday evening:

Today, House Finance voted to eliminate all school bond debt reimbursement across Alaska. As a result, property taxes...

Posted by Mayor Ethan Berkowitz on Wednesday, April 3, 2019

"Today, House Finance voted to eliminate all school bond debt reimbursement across Alaska. As a result, property taxes will increase approximately $120 for every $100,000 in property value. In Anchorage, the average home is worth $350,000, which means an additional $420/year in property taxes in order to cover school bond debt. For a $700,000 home, it will be $840 more annually. Legislators who voted yes on this include Jennifer Johnston, Kelly Merrick, Colleen Sullivan-Leonard, Ben Carpenter, Bart LeBon, Kathy Tilton and Tammie Wilson. #costshift #callyourlegislator" -@MayorBerkowitz

The mayor's communication's director attributed the numbers in his post to the Municipal Office of Management and Budget.