Governor Bill Walker’s fiscal plan rollout last week included the possibility of borrowing money to take the pressure off of Alaska’s general fund in these financially constrained times.
State officials say while borrowing could maintain state spending, it would also raise costs for future generations who would have to pay off the debt.
The borrowing would take care of two of the state’s big fiscal responsibilities: future retirement obligations that Alaska has been slowly paying down and the annual matching of federal monies, mostly for federal projects.
That would mean issuing $2.5 billion in pension obligation bonds to reduce annual retirement costs, as well as taking on additional general obligation bonds to meet state requirements to match federal spending that brings in nearly $1 billion a year to Alaska.
Overall that would mean borrowing over $400 million in costs that would otherwise be funded by the state’s general fund. That amount is twice the $200 million Walker estimates would be raised by his state income tax proposal.
Both bond proposals would need approval from the Alaska State Legislature and the general obligation bonds will also require voter approval next year in a general election.