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SB 72 Community Revenue Sharing Update

Senate Bill 72 Community Revenue Sharing was passed out of House Finance Monday, March 3. The Committee increased the Revenue Sharing Fund to $180 million with an annual payout of $60 million. High praises are once again necessary to those who testified last Friday (Feb. 29). The consistent message by membership requesting an increase in the Revenue Sharing Fund to $225 million with an Annual Payout of $75 million really paid off (pun intended) as it seems the committee took notice.

If you have the opportunity to speak with your legislators please make sure you thank them for their hard work and willingness to increase the Fund amount. The reasoning to why the Fund was increased to $60 million instead of the requested $75 million was that several legislators would like to have enough money to fund high energy costs in rural Alaska and do not want Revenue Sharing taking away from that appropriation.

The Senate Finance Committee is also keeping consistent with the House by increasing the Revenue Sharing Fund in the Supplemental Budget to $180 million.

Once again, thank you to those who testified February 29 and continue to keep up the good work!

If you have any questions regarding the changes to SB 72 please write info@akml.org or call us at (907) 586-1325.

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HB 273 Education Funding Awaiting Transmittal to Governor

After much debate on the Senate Floor this past week HB 273 Education Funding was finally passed by the Senate and currently awaits transmittal to the Governor. HB 273 is a result of the Joint Legislative Education Funding Task Force's findings and aims to fix certain education funding formulas.

As highlighted by Sen. Lyman Hoffman in a Tundra Drums Article Friday, March 7, the bill implements five recommendations from the Task Force as copied from the article in bullets below.

• Declining enrollment "step-down". If a school’s average daily minimum count decreases 5 percent or more in one fiscal year, resulting funding decrease will be spread over next three fiscal years.
• Raises intensive needs student funding. Currently, intensive needs students are funded five times the base student allocation. Over the next three fiscal years, this would rise.
• District cost factor. Phases in implementation of the University of Alaska Anchorage’s Institute of Social and Economic Research study recommendations with 50 percent in place in FY09, the remaining 50 percent spread over the next four years.
• Base student allocation is currently $5,380. Would raise this by $100 per year over next three fiscal years.
• Pupil transportation: Recalibrates the funding based on the most recent audits by the Department of Education and Early Development. Amounts will be adjusted according to the consumer price index for Anchorage. The adjustment will sunset in 2011.

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New Bills

There were no new bills of interest submitted to legislator this week.

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Bill Updates

As new bills pop up each day we will do our best to include them online at www.akml.org. Bills will be listed under the AML Legislative Subcommittee that the bill best applies. A brief summary will be included with each bill to help clarify the bill before you dive into it's guts. If you have any questions regarding these summaries or the nature of the bill, please don;t hesitate to call us. We may not always have the answers, but we sure are fun to talk to.

Do you have bills in mind that aren't listed?
Let us know! We might have missed it.

You can also track, categorize and receive bill updates yourself.
If you aren't familiar with BASIS or BTMF, we strongly recommend visiting the Legislative Affairs web site at www.legis.state.ak.us and take advantage of a great, free resource. If you have any questions on how to set up your own account, or tips on how to use BTMF, please give us call at (907) 586-1325.

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Bills on the Move

Bills on the Move received a hidden overhaul for this session. Bill updates are now linked directly to BASIS and are updated automatically by-the-minute. To see which bills are moving throughout the day, just visit AML's Bills on the Move.

The Alaska Municipal League urges the State to adopt a sustainable Revenue Sharing program by annually appropriating 6% of all natural resource revenues to municipalities with a minimum of $25,000 to unorganized communities, $75,000 to all municipalities, $250,000 to boroughs, and have the remaining revenue allocated on a per capita basis.

The resources of this State belong to all of Alaska’s people. Cities and boroughs were formed by the State as political subdivisions and are the entities responsible for providing local services to those people. Without municipal revenue sharing, the entire cost of all local services must be entirely on the backs of the local taxpayers. With increasing fuel costs, increasing benefit costs and inflation, as well as the lack of a tax base for smaller communities, local services are being seriously curtailed or stopped. Larger communities are seeing tax increases that are having serious, negative impacts on their residents. The sharing of state revenues is consistent with the “owner” state concept, intergovernmental cooperation and constitutional provisions which provide for natural resource ownership by all the people of the State of Alaska.

During years of high resource revenues, Alaska’s municipalities would realize benefits that would be directly passed on to local residents. During lean years, Alaska’s municipalities would be required to rein in many expenses and/or services, such as the State would have to do under those same circumstances.

While capital funds help communities build needed infrastructure, revenue sharing is the money that helps fund the day-to-day operation of local government. A new water system, funded through the capital budget, will not fulfill its goals if there are no trained operators to maintain the system, city clerks to bill for the system or much-needed fuel to heat the governmental buildings. Cities and boroughs that must impose large tax bills will realize less spending in the community as taxpayers tighten their belts.

Delivery of services at the local level to citizen/owners is part of annual state responsibility to those citizen/owners for the betterment of the State of Alaska.

The State of Alaska created the Public Employees Retirement System (PERS) in 1962 to provide a retirement system for state and participating municipal employees.  Most cities and boroughs in Alaska have participated in PERS for many years.  The basic premise of a defined benefit pension plan is that employer and/or employee contributions are invested by the plan administrator in accord with sound actuarial principles so that adequate funds are available for retiree pensions and health care benefits. 

The PERS system is seriously under funded on a statewide basis.  The plan’s assets are roughly equal to only 70% of the projected plan expenses and the Alaska Retirement Management Board has drastically raised the PERS employer contributions rates to catastrophically high levels.  If gone unaddressed, this problem could eventually zero out Alaska ’s Permanent Fund. 

The Alaska Municipal League realize that as individual member employer liabilities have been affected by other employer’s actions, and member’s assets have been blended and reallocated yearly, the State cannot say what any member’s actual individual asset or liability balance is, and therefore cannot say what their unfunded liability is, either.  Fiduciary duty and legal issues will arise without an equitable and timely resolution.

The League supports, therefore, amending state statutes to reflect an actual consolidated PERS plan with one uniform consolidated normal cost rate that all members pay.  We maintain that 85% of the unfunded obligation should go on the State’s books and be accounted fro and paid by the State as a separate stand alone obligation.  The other 15% of the unfunded obligation belongs to all PERS employers.  To pay the 15% unfunded obligation, there should be a separate uniform consolidated past service cost rate that all members employers pay, that is a separate rate from the normal cost rate.  We believe that TRS should be dealt with in the same manner.  Methods to reduce the future carrying costs of the unfunded obligations should be sought and used. 

We believe the above shared solution framework will bring the attributes of stability, predictability and affordability to its members and will insure a sustainable retirement system.