JUNEAU, Alaska — Gov. Sean Parnell said Wednesday that he's not inclined toward an infusion of equity, perhaps in the billions of dollars, to address Alaska's unfunded pension liabilities.
Several lawmakers have raised that idea, but Parnell told reporters he'd rather see the state stay on its current payment plan — under which payments would increase before they fall — or move to a level-pay plan.
Parnell said the state will meet the obligation, which currently stands around $11 billion. He said he'd rather see that done with cash, rather than "dumping" in billions of dollars in savings that would essentially be off-limits if the state got in a financial pinch.
Parnell said the state also risks losing value of the money if the stock market tanks again.
Sen. Johnny Ellis, D-Anchorage, has proposed creation of a pension trust reserve fund and transferring $2 billion from the Constitutional Budget Reserve Fund to that new fund. The Senate Finance Committee is expected to take up the pension issue.
Committee co-chair Bert Stedman has said an infusion of equity greater than $1 billion and less than $4 billion could be considered.
Separately, Parnell said he doesn't support a Senate bill that would give public employees the option of choosing between a retirement account, like a 401(k), or earning a traditional pension. In 2005, the Legislature passed a measure taking the state from a defined benefit, or pension, program to defined contribution, or 401(k)-style, benefit. Union leaders have said this was a mistake, and has hurt employee retention.
Bill supporters are trying to get the measure as "revenue-neutral" as possible, so as not to cost the system any more. But Parnell said cost-neutral is "cost-neutral today" and assumes good economic times ahead.
Flawed assumptions contributed to the current situation, as did a market crash in 2009, he said, and "putting that risk on the system for the benefit of only state employees, when everyone else bears the risk themselves, is something that I don't support at this point."
"I don't see digging a deeper hole. I don't want to do that to the people of Alaska," he said.