Senate minority outlines pension reform, gas line concerns at press conference

Alaska Senate minority members outlined their positions on pension reform and the proposed gas line project at a press conference Thursday. Senators raised concerns about fiscal responsibility and economic development.

Pension Reform

Senator Kaufman said the Senate Finance Committee released a new committee substitute for House Bill 78, the pension reform legislation. The substitute incorporates amendments designed to prevent the insolvency problems that created the state's current $7 billion pension liability. The bill aims to avoid repeating the mistakes of Alaska's previous defined benefit system.

"The intent of the amendments is to try and avoid some of those things," Kaufman said, referring to the structural problems that led to the unfunded liability.

Kaufman said stakeholders will be heard in hearings next week on the latest committee substitute.

The minority leader said he would have accumulated more retirement savings under a defined contribution plan with the Supplemental Benefit System than under his current defined benefit pension. He said defined contribution plans create real assets that can be passed to heirs, unlike traditional pensions.

Kaufman clarified that SBS is the Supplemental Benefit System, the Social Security equivalent that state employees contribute to with matching state contributions.

Gas Line Project Concerns

A senator said he was concerned about what he characterized as insufficient commitment to the Alaska LNG project in the Senate Resources Committee. The senator said the committee's modification of House Joint Resolution 18 changed the Legislature's support for the project from enthusiastic backing to lukewarm acceptance.

"Is that the signal that we want to be projecting to investors?" the senator asked.

The senator said the project would transform Alaska's economy similar to how the Trans-Alaska Pipeline System did 50 years ago. It would provide construction jobs in the short term and lower energy costs long-term. He cited his own utility bills in Fairbanks: $25 for natural gas versus 33 cents per kilowatt hour for electricity, as evidence of the potential savings.

The senator said two competing bills are under consideration. Senate Bill 275, sponsored by the Resources Committee, and Senate Bill 280, sponsored by the governor. He said SB 280 addresses the property tax issue, which was identified in the late 1990s. Municipalities have raised concerns about providing services to a growing population during construction, but the project needs to be economically viable for financing to work, he said.