Legislature Votes To End School Bond Reimbursements, But Uncertainty Lingers For Anchorage

The Legislature has passed a bill that would put its school bond reimbursement program on hiatus. APRN’s Alexandra Gutierrez reports that the big question is whether it will affect Anchorage’s $60 million bonding proposition.

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Right now, when municipalities bond for school construction costs, the state pays more than half the bill.

“We’re paying nearly $120 million in school bonds in this year alone,” said Thompson.

Rep. Steve Thompson, a Fairbanks Republican, carried a bill that would stop the program for five years, and only bring it back with a reduced reimbursement rate. With Alaska facing a multi-billion-dollar deficit, Thompson said it was not appropriate for the state to automatically take on more financial obligations.

“We are simply trying to control our debt,” said Thompson.

Debate over the bill focused on two things: money and timing. Rep. Sam Kito, a Juneau Democrat, opposed it, saying the legislation could create larger deferred maintenance costs.

“By taking a holiday, these costs aren’t going to go away,” said Kito. “The costs are still going to be there. They’re just going to be delayed, and it’s going to cost us more when we actually get to that point where we have to fund those projects again.”

Anchorage Republican Liz Vazquez said she thought the bill had merit in principle, but that she disliked the process around it. The way the bill is written, it would go into effect retroactively, closing the program to new school bonds issued after January 1 of this year. That would block Anchorage from getting funding for the school bonding proposition being considered in the April 7 election.

“Whether it’s the IRS, whether it’s another governmental agency, I detest any government agency or group that decides retroactively to change its rules,” said Vazquez.

Rep. Lance Pruitt, another Anchorage Republican, sympathized with this point.

“I come from Anchorage, and I will recognize that this is really difficult because some of the individuals in my community are currently making some of these decisions on whether or not to go forward with this bond,” said Pruitt.

But Pruitt then stressed that the state could not delay action on the program, given the revenue shortfall. He compared the state to a bird that kept flying into a window of his home — until it killed itself.

“This is the appropriate time to step back, to reevaluate the program, to come back with one that makes sense, and to stop running into that virtual window,” continued Pruitt with the metaphor.

The House passed the bill with a 23 to 15 vote on Wednesday afternoon. Anchorage Republican Liz Vazquez and Dillingham Democrat Bryce Edgmon joined the minority caucus in opposition to the bill.

But in a complicated procedural move, the provision to retroactively apply the bill to the Anchorage election failed. With a 24 to 14 vote, the House did not reach the two-thirds threshold needed to change the date when the bill goes into effect. Representatives will come back on Thursday to reconsider the bill and once more take up that provision.

If it fails again, the legislation will go into effect 90 days after it is signed into law, and the Anchorage school bonds will be the last ones to be included in the reimbursement program.

The bill has already passed the Senate.