Gov. Mike Dunleavy has vetoed controversial legislation that would have reintroduced a costly, government-run defined benefit pension system for state employees.
The measure was passed by the Democrat-controlled State Legislature with the help of a few GOP allies.
On May 18, Dunleavy red-lined the legislation. In order to override the governor, the Legislature needed three-quarters of lawmakers to agree (40 of the 60 members), but it failed to reach the threshold with 33 voting to override – including several Republicans who caucus with the Democrat-led majority. This included Representative Louise Stutes (R-Kodiak) along with Senators Jesse Bjorkman (R-Nikiski), Cathy Giessel (R-Anchorage), Kelly Merrick (R-Eagle River) and Gary Stevens (R-Kodiak).
A total of 27 more conservative-leaning lawmakers voted to successfully uphold the veto.
The conservative public policy group, Americans for Prosperity-Alaska (AFP-Alaska), congratulated Dunleavy on the veto, while praising conservative lawmakers for helping to sustain it.
AFP-Alaska had expressed concerns that defined benefit systems historically lead to cost overruns, unfunded liabilities, and reduced budget flexibility for essential state services.
“Governor Dunleavy and the legislature made the right decision to protect Alaska taxpayers, present and future, from a return to an unsustainable pension system that would have exposed the state to billions in long-term liabilities,” said AFP Regional Vice President David From. “We are grateful for his leadership and commitment to fiscal responsibility. AFP appreciates the lawmakers who recognized that reopening a defined benefit system would have shifted significant financial risk onto taxpayers – risk Alaska simply cannot afford.”
ALASKA WATCHMAN DIRECT TO YOUR INBOX
In 2005, Alaska transitioned from a Defined Benefit pension plan to a Defined Contribution plan, similar to a 401(k)-style retirement system. This change was made because the state had accrued a sizable amount of unfunded pension liabilities and could no longer afford the previous system. Today, the state still carries over $6.1 billion in unfunded liabilities from its previous DB system, ranking 13th highest in unfunded pension liabilities nationwide.
