OMB proposes solution for empty state savings accounts: Keep them empty

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ANCHORAGE (KTUU) - The Office of Management and Budget has proposed keeping dozens of the state’s swept savings accounts empty and only funding impacted programs for fiscal year 2020.

During the regular legislative session, the Legislature failed to pass what is known as “the reverse sweep” before June 30. As a consequence, dozens of state savings accounts were emptied into the Constitutional Budget Reserve.

“In my opinion, it’s a chaotic mess,” said Sen. Bert Stedman, R- Sitka, a co-chair of the Senate Finance Committee, of the state’s current fiscal situation.

Without a vote from the Legislature, the Power Cost Equalization Fund that helps rural Alaskans with their electricity bills will be emptied. Sen. Lyman Hoffman, D-Bethel, said on Thursday that without assistance from the PCE, some Alaskans could see their power bills rise 50-100 percent..

On July 9, thousands of Alaskan college students received an email saying that they would not receive their scholarships as the Higher Education Investment Fund had also been swept.

“The impact is happening now and it will continue to happen as long as we don’t have a three-quarter vote override,” said Anchorage Republican Sen. Natasha von Imhof, explaining that her office had received inquiries from people concerned about losing the scholarships.

Passing the reverse sweep backfills dozens of the state’s designated accounts and is typically a routine annual affair. Disagreements over the size of the Permanent Fund dividend stopped the vote from succeeding in 2019.

As an alternative to backfilling all the swept designated accounts, OMB suggested to the Senate Finance Committee that only the required services for FY2020 be appropriated. Neil Steininger, the administrative services director for OMB, said that would cost the state $115 million in general fund dollars.

Sitka Republican Sen. Bert Stedman said as a result of not backfilling the swept savings accounts, the current account balance of the CBR would rise by more than $2 billion.

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