The Senate Finance Committee introduced a bill, SB 209, that would raise local government and school retirement contributions from 22 percent to 26.5 percent by 2018 and would likely translate to cuts in services and or tax increases locally.
PERS, or Public Employee Retirement System, is the state’s retirement benefit plan. Every public employee has a certain tier of benefits and each municipality annually chips in a portion of those benefits.
SB 209 increases those municipal contributions incrementally and means local government would increase by $270,970 by this June and would increase the total contribution to $1.3 million by June 2018.
A similar bill, SB 207, would increase local teacher’s retirement contribution by 8.4 percent by June, 2018 reflecting a total local contribution of $727,847.
In response to a questionnaire sent out by the Alaska Municipal League regarding how those impacts would effect local government and citizens, Petersburg Borough Manager wrote that the borough would need to take multiple approaches to draw new revenue.
“First, the property tax mill rate would need to be raised 1.09 mils throughout the borough,” Giesbrecht wrote. “This would effectively max out property tax collections in service area one, and raise the rate outside of service are one to 5.09 from 4.0. If this was to occur, the borough could offset 71 percent of the lost revenue, leaving the community with a deficit of $139,620 in the first year.”
Petersburg School District Superintendent Erica Kludt-Painter also filled out a response, citing a decrease in staff and programs.
“Likely, the first to go would be a reduction or elimination of student activities (music, academic, art, athletics); then reduction or elimination of swim/migrant program and associated staff (which would likely result in the pool shutting down, as the school pays the utilities),” Kludt-Painter wrote.
PERS also affects Petersburg Medical Clinic and PMC CEO Elizabeth Woodyard wrote that PMC would not be able to raise rates to cover the additional $526,460 proposed increase during the next three years.
“Both Medicare and Medicaid pay a fixed rate,” Woodyard wrote. “Although the medical center can increase rates, private insurance companies will only pay what is normal and customary.”
She went on to write that any changes in property taxes or other increases in borough revenues would not benefit the medical center and PMC would be forced to lose staff and services.
Municipalities across Alaska are already facing decreased revenue sharing from the state. In Petersburg that amounts to a loss of $30 million from its normal $60 million it receives in revenue sharing.
The cuts come as the state legislature continues to deal with the state’s multi-billion dollar budget deficit.
An opportunity to comment about both bills before the Senate Finance Committee will be available in the coming days at the Petersburg Legislative Information Office. Contact the office or visit http://w3.legis.state.ak.us to learn when and how you can comment.
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