Legislature halts school construction payments

MAT-SU — A fast-moving bill that cleared both chambers of the Alaska Legislature in just over a week will suspend the current program for state funding of public school construction.

Though most agreed Mat-Su would be one of the hardest hit areas when the moratorium goes into place, the measure — which cleared the Senate on March 25 and the House of Representatives Thursday afternoon — won universal support among Valley legislators and even a begrudging support from local school officials.

“Given the importance of this program, we cannot support the discontinuance of the school bond debt reimbursement program altogether,” said Deena Paramo, Mat-Su Borough School District superintendent, in her testimony to the House Finance Committee on Monday. “However, the Matanuska-Susitna Borough School District’s board of education and administration, alike, understand the immense financial challenges facing the state. We know that everyone must give in times of scarcity, and that this measure is being proposed out of the necessity to limit spending.”

Currently, school construction is funded through voter-approved ballot measures that allow municipal governments to sell bonds to pay for capital projects. The state is required by law to reimburse parts of many of those projects. Some projects qualify for 60 percent from the state, others for 70 percent.

In her testimony, Paramo noted that the program in recent years has helped the district build six new educational institutions in Mat-Su.

Rep. Shelley Hughes, R-Palmer, spoke in favor of the bill. Noting that the Mat-Su region has been the fast growing area of Alaska for more than two decades and that these population increases mean more students, to the tune of about one new school a year to house the district’s growing student body.

Observing the customs of the Legislature, she directed her comments to House Speaker Mike Chenault and said that her constituents were ready to tighten their belts.

“Doggonit, Mr. Speaker, if Mat-Su can do it, so can the rest of the state,” Hughes said.

Rep. Jim Colver, R-Sutton, said that the way things stand right now, the bill is ready for Gov. Bill Walker’s signature, but that some of his colleagues in the House could open the bill up for yet another vote during a Thursday evening floor session. As of press time that session had not begun.

The bill, once signed into law, would work like this:

• The state would not pay any school bonds that local voters approve from 2015 through 2020.

• After 2020, if the Legislature doesn’t change its mind, the reimbursement program would be reinstated, but the 60 percent projects would only get 40 percent reimbursements and the 70 percent reimbursement would drop to 50 percent.

“You can be guaranteed that after the five-year hiatus that this bill provides, Mat-Su will be before you with a school bond debt reimbursement program application to support the needs of our growing community,” Paramo said in her testimony.

Two Valley senators who spoke during the March 25 floor session at which the bill cleared the Senate were both in favor of the bill.

Sen. Mike Dunleavy, R-Meadow Lakes, said that even though he recognizes that the district adds 232 new students each year, he supports the cut as a way to help bridge the state’s sizable budget gap.

“It’s an unprecedented free fall in the price of oil,” Dunleavy said. “This is just the beginning of tough decisions that we all have to make.”

Sen. BIll Stoltze, R-Chugiak, agreed.

“If this is painful, gosh, there’s going to be a lot more severe pain. People ought to put on some Kevlar, because this is mild compared to some of the decisions we’re going to have to make,” he said.

Many school districts have spent months working on bond packages that the bill puts in jeopardy. Many, including the Fairbanks-North Star Borough and the Bristol Bay Borough, spoke out at the Legislature, urging that the start date for the moratorium be delayed.

The local government farthest along is the Municipality of Anchorage, which is considering a school bond proposition in its election next week.

The version of the bill that the Senate passed would have taken effect the moment the governor signed it and, if signed early enough, would have made those bonds ineligible for reimbursement. The House, however, did not manage to pass the provision that made the legislation take immediate effect.

The bill, as it stands now, would not take effect until 90 days after the governor signs it, well after Anchorage’s election.

Anchorage legislators argued vociferously in favor of letting their city get bond funding. Democratic Sen. Bill Wielechowski said that the needs the projects on the ballot address aren’t going away.

“When the roof falls in on your school, you’ve got to fix it. When the boiler breaks down, you’ve got to fix it,” he said.

So, he pointed out, Anchorage taxpayers are going to have to foot that bill sooner or later and, if this bill passes, they’ll have to do it without state help. Thus, he argued, eliminating the reimbursement program has the effect of transferring that financial burden to Anchorage taxpayers.

Wielechowski also pointed out that even in the 1980s, when oil was at $8 a barrel, the state didn’t do away with bond reimbursement. He argued that the crisis the state faced in the 80s was worse than the crisis it faces now.

“The sky is not falling, we’ve got billions in the bank. Let’s cut. Let’s cut waste. Let’s cut inefficient programs,” he said. “And there’s certainly plenty of those to go around. But don’t balance the budget on the backs of the property taxpayers,” Wielechowski said.

Sen. Johnny Ellis, another Anchorage Democrat, opposed the bill for all the reasons Wielechowski did, but also based on the fact that early voting had already started in Anchorage’s election.

Contact Andrew Wellner at andrew.wellner@frontiersman.com.