Americans for Prosperity–Alaska (AFP–AK) today called on Governor Mike Dunleavy to veto legislation that would reinstate a defined benefit pension system for State of Alaska employees, warning it could saddle the state with billions in new liabilities and leave a lasting negative fiscal legacy. The governor must act on the bill by May 18.

House Bill 78 recently passed the Alaska Legislature. The Senate approved it with a 12-8 vote, and the House concurred with a 21-19 vote along caucus lines. Last month, it was transmitted to Governor Mike Dunleavy for signature, veto, or to become law without his signature.

Alaska closed its prior defined benefit pension system nearly 20 years ago, due to massive unfunded liabilities.

The AFP-AK statement warned that returning to a pension model the state abandoned in 2005 would reverse hard-earned fiscal progress and expose taxpayers to the same risks that previously generated more than $6.1 billion in unfunded pension liabilities.

AFP’s National President and CEO Emily Seidel issued the following statement:

“Governor Dunleavy has a clear choice: protect Alaska’s fiscal future or risk leaving office with a legacy of reopening the door to massive pension debt. This bill threatens to bankrupt the state over time and force difficult choices like new taxes or reduced dividends for Alaskans. Alaska is already struggling to meet existing obligations. Adding billions in new liabilities is not just irresponsible—it’s unsustainable. 

“Alaskans deserve a stable, sustainable retirement system – not a return to the policies that created billions of debts. We urge Governor Dunleavy to veto this legislation and protect the state’s financial future.”

AFP-AK warned that the proposal could add up to $7 billion or more in additional costs over the coming decades, driven by what the groups calls “overly optimistic investment assumptions and market uncertainty.” They add that Alaska’s pension systems have historically underperformed projections – earning about 5.8% annually since 2001, well below the assumptions required to keep the new plan solvent. 

In Alaska, most public employees do not remain in their positions long enough to benefit from a traditional pension structure, the AFP-AK noted, which means the policy could disproportionately benefit a small subset of long-tenured workers while reducing flexibility for the broader workforce.

TAKING ACTION

— Click here to contact Gov. Mike Dunleavy.

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