REPORT: HB 78’s Flawed Math Could Cost Alaskans More Than $11.4 Billion
ANCHORAGE, AK – New analysis by the Reason Foundation’s Pension Integrity Project finds that House Bill 78, legislation that would reopen the defined benefit pension system for government workers, could cost Alaskans a whopping $11.4 billion in added costs.
In fact, Reason finds that the bill’s estimated costs hinge on an assumption that Alaska’s pension plans would earn 7.25% in annual returns. This is quite an overly optimistic assumption considering that the state’s pension plans have earned just 5.8% annual returns on average since 2001.
In a state where residents are clearly opposed to the introduction of new taxes, this provides quite the paradox for lawmakers – how will Alaska afford reopening the government worker pension system?
AFP-Alaska State Director Bethany Marcum issued the following statement:
“The more this legislation is scrutinized, the clearer it becomes that HB 78 is not a fiscally solvent proposal. Lawmakers who assert this bill won’t require any additional state funding are basing that belief on multiple flawed assumptions, most notably that our pension plans can significantly outpace what other state pensions expect to earn on their investments. It is negligent for lawmakers to tout a proposal based on this flawed assumption.
“It’s time for lawmakers to be direct – this bill will cost Alaskans billions of dollars, almost certainly leading to a new state income tax. And that’s a risk Alaska simply can’t afford to take.”
