Bill would extend state's moratorium on reimbursement for school construction

Published: Apr. 1, 2019 at 5:34 PM AKDT
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The House Finance Committee heard legislation Monday would extend a moratorium on the state reimbursing new school bonds until 2025.

Nils Andreassen, the executive director of the Alaska Municipal League, spoke against the moratorium, saying that school districts need state funding to assist in major construction projects and maintenance.

The current Operating Budget before the House Finance Committee would see the state continue to pay 70 percent of some older school debt and 60 percent of others. However, that figure could change in the coming week as debate continues in House Finance before the budget is sent to the floor.

House Bill 106, sponsored by Rep. Tammie Wilson, R - North Pole, would have the state not pay back school construction debt incurred by municipal governments until 2025. After that point, reimbursement rates would be set at 50 percent and 40 percent.

The bill received “reluctant support” from lawmakers such as Rep. Andy Josephson, D - Anchorage, and vocal support from others such as Rep. Ben Carpenter, R - Nikiski. “It strikes me that we have a $1.6 billion deficit and we’re in a recession, it’s obvious that we can’t support spending levels that we have right now,” he said.

The Legislative Finance Division, a nonpartisan organization that advises the Legislature, reports that “it is difficult to accurately predict the fiscal impact this bill would have.”

In 2016, the Legislature approved a stoppage for five years on reimbursing new school bonds that were issued after Jan. 1, 2015. For debt incurred before that date, the state had been paying around 70 percent on some debt and 60 on others before Gov. Bill Walker vetoed the amount of debt that would be repaid by the state.

Gov. Mike Dunleavy’s FY2020 budget goes a step further. The administration would eliminate all payments to municipal governments for any of their school construction costs.

Michael Barnhill, the policy director at the Office of Management and Budget, told a Senate Finance Committee hearing in February that the inventory of

The governor introduced Senate Bill 64 on Feb. 15 to repeal payments to municipal governments for school construction debt. “The program, while well-intentioned, has become unsustainable and unnecessary,” read the governor’s transmittal letter.

Under SB 64, the state would save an estimated $100 million in fiscal year 2020.

“Honestly, districts and local governments are concerned,” said Andreassen. “This is one constitutional obligation that the state has and it’s essential to a community’s quality of life.”

School districts across the state hold varying levels of debt. The Anchorage School District is asking voters to approve a roughly

For the Matanuska-Susitna Borough School District,

. In 2020, the borough would need to pay $18.3 million.