The House passed a bill Monday, April 15, extending the moratorium on school bond debt reimbursement until 2025.
The State has reimbursed municipalities for school construction since the program began in 1970. However, the percentage of reimbursement has steadily decreased as legislators have scaled back the program.
Since the moratorium began in 2015, the State has been prohibited from reimbursing municipalities for new school construction and rehabilitation projects.
House Finance Co-chair Tammie Wilson (R-North Pole) sponsored HB 106 extending the moratorium.
“This does not impact the bond projects that were put forth before 2015,” she said on the House floor.
Because school bond debt reimbursement and funding for rural school construction are linked by a statutory formula, passage of HB 106 would result in a corresponding cut to the Rural Education Attendance Area (REAA). Unlike municipalities, the REAA does not have taxing or bonding authority.
The Alaska Municipal League and some school districts, particularly in rural Alaska, have argued that the State must continue to fund school bond debt reimbursement because of the constitutional requirement to provide for a public education.
The House Finance Committee voted to cut all $139 million for school construction from the operating budget. That money was for debt accrued prior to 2015.
An amendment on the House floor restored half the funding to municipalities and the REAA.
“The fact that this bill may pass suggests strongly that the body was right to restore some funding for school bond debt reimbursement last week, because it would be a double hit to have a moratorium for ten years and suspend assistance for projects that have already been bonded by local governments,” said Rep. Andy Josephson (D-Anchorage).
“I would say that the reason for this moratorium is a continuing lack of the collective will of the 60 of us to move forward with a comprehensive fiscal plan,” he added. “I think it’s still something that we need to do, and I look forward to the day when we do it.”
Wilson said that during the five-year extension, she intends to work with the Department of Education & Early Development (DEED) on adding more restrictions to school bond debt reimbursement, such as an energy efficiency requirement. She said that the end result will be a more durable program.
Wilson and Josephson were the only House members to speak on the bill Monday.
HB 106 passed the House 37-1. Rep. Sharon Jackson (R-Eagle River) was the lone “no” vote. Rep. Jonathan Kreiss-Tomkins (D-Sitka) and Rep. Mark Neuman (R-Big Lake) were excused.
The bill now heads to the Senate, where it is likely to pass before the end of the legislative session.
If/when it does pass the Senate, HB 106 will almost certainly be signed by Gov. Mike Dunleavy.
Dunleavy has proposed a separate bill to wholly repeal school bond debt reimbursement. While the House version has not received a hearing, the Senate version (SB 64) was set to move from the Senate Education Committee late Monday afternoon after an amendment from Senate Majority Leader Mia Costello (R-Anchorage) clarifying that the repeal only applies to debt since 2015.
The easy passage of HB 106 Monday suggests school districts and municipalities should budget for the full financial burden of new school construction projects at least through 2025.