Keeping promises while maintaining other commitments: It's what most Alaskans and Americans do every day. We pay our mortgages and other bills, and set aside funds for college and retirement. As citizens, we do our best to manage multiple financial demands with the limited financial resources we have.
Similarly, the state of Alaska must keep its financial promises, while balancing many critical priorities. This past legislative session, Gov. Sean Parnell and a unanimous Legislature kept a constitutional commitment to retirees while stopping the biggest spending increases in the state budget. With $3 billion from the Constitutional Budget Reserve moved into the state's public employee and teacher retirement funds, Alaska’s financial foundation is much more secure.
Some critics have suggested that more should have been appropriated, or that the methodology for future payments could be different. While that may be true, just like most Alaskans, the state has other obligations. We need to keep funding education and public safety. We need to save money for the future and fund important projects, such as a gas line, energy projects, and roads and bridges.
The issue is not so much whether we pay down Alaska's unfunded pension liability quickly but whether we fairly and appropriately balance all our financial commitments.
Although last session the state could have emptied the $12 billion Constitutional Budget Reserve into the retirement trust funds, and saved a few billion dollars in interest costs over the next 25 years, a reasonable question to ask is whether that would be fair to the majority of Alaskans who have no stake in these benefit programs.
Further, would that impair the state's ability to invest in a gas pipeline, a project that will benefit all Alaskans for decades to come? There are not many homeowners who take all of their retirement and rainy day savings to pay off their entire home mortgage just five years into their loan, particularly where other financial needs exist.
Across the country, states have been wrestling with unfunded retirement obligations. Some states chose to cut benefits to existing retirees. But Alaska chose a different course because we keep our constitutional promises. And outside observers are now beginning to take notice. The research director of the National Association of State Retirement Administrators said recently that he is not aware of any other state that has dipped into reserves "in a substantial way like this, to pay down an unfunded liability."
This is vitally important as a statement of who we are as a people, as well as a statement to the nation and the world that our word is good, whether related to retirement, energy security, Arctic transportation or respect for all people.
Each future legislative session will present an opportunity to consider anew how best to fund the state's multiple financial obligations. For now, we want to express a sincere note of gratitude to the 28th Legislature for its willingness to take the high road and strike a fair balance to keep the state's promises.
Retirees’ pensions are more secure, and with lower annual payments required from the state’s budget, we are responsibly reducing the annual state operating budget for years to come.
Angela M. Rodell is commissioner of the Alaska Department of Revenue. Curtis Thayer is commissioner of the Alaska Department of Administration.
The views expressed here are the writers' own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.