At the May 3 Alaska Senate District E constituent meeting, attended by Senator Cathy Giessel (District E), Representative Kopp (District 10), and Representative Holland (District 9), legislators were questioned about a pension plan some intend to resurrect for State employees. 

It wasn’t that long ago that the legislature had to take special action to address a funding shortfall for the prior state pension plan. This year the legislature struggles to identify revenue to fund basic state programs like education. Senator Giessel’s recent public position on natural resource development is that Alaska is not a place to plunder. This suggests Senator Giessel may not support even a modest expansion of natural resource development. But, even if she did, certainly the democratic colleagues of her caucus wouldn’t support such expansion. Senator Giessel was asked, “What is the simple funding solution to the obvious issues with reinstating a pension plan for the public employees of Alaska?” 

Senator Giessel first addressed her position about Alaska not being a place to plunder. She clarified that she envisions Alaska taking over the role of ensuring adequate regulation and controls exist to protect air and water quality. Presumably, this effort would require enabling legislation, a new state agency or expansion of existing agencies, new regulations, enforcement rules, and compliance mechanisms. Giessel did not provide specific details about her vision for expanding environmental controls over Alaska’s resource development industry. Giessel did, however, express concern over Alaska’s history of experiences with entities plundering Alaska’s resources citing examples like the klondike gold rush era and the fishing industry’s past practices prior to statehood.

Still, a handful of constituents cheered the idea of increasing and creating new state taxes.

Senator Giessel attributed problems with Alaska’s prior pension plan to a math error committed by an actuary. Her pension plan, she claims, is fully endorsed as a practically fail-safe plan following a review by current state-employed actuaries – barring extraordinary circumstances, of course. Furthermore, two additional actuaries have reviewed and provided similar endorsements. One of these two additional reviewers is rumored to be a former state-employed actuary himself. 

Some have placed the price tag on Giessel’s new pension proposal at over $9B. Senator Giessel believes her plan is a bargain claiming an annual cost of only $45M to $50M and a net savings to taxpayers after accounting for attrition and the associated administrative cost to handle personnel related expenses. 

An indicated feature of the new pension plan is that contributions may depend in part on market performance, which helps reduce the possibility that the state could face future pension funding issues. 

Questioned later in the constituent meeting about dealing with the Alaska Department of Transportation, Senator Giessel accused the DOT of being impossible to work with, and said the only way to deal with them is to cut their budget, which she says is exactly what the Senate Finance Committee has done.  Giessel says she had identified an additional $4M reduction, but that reduction had been sidelined. Cutting the DOT budget, of course, would only make it more challenging to access Alaska’s vast resources necessary to generate new revenue and fund things like a new state employee pension program.

There was also a suggestion that the proposed pension plan is cheaper than the current defined contribution plan. If this is true, State employees might question whether Giessel’s plan is truly an increase in benefits to state employees, or a bait and switch. We may never truly discover this given Giessel’s propensity to disguise herself as both a Republican and a progressive Democrat. 

Meeting handouts highlight how 40.7% of state revenue is from the federal government, 37.3% of state revenue is from Investment earnings, with only 13.8% coming from petroleum. Still, a handful of constituents cheered the idea of increasing and creating new state taxes. Senator Giessel presented her plan to generate new revenue by taxing S-Corporations while painting the majority owner of Hilcorp as an aristocratic polo-club lounger. 

If it is true that you get more of what you subsidize and less of what you tax, the writing is on the wall. We can clearly see where Giessel’s plans will lead us. 

The views expressed here are those of the author.

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