1999-07-28                     House Journal                      Page 1795
HB 199                                                                       
The following letter, dated July 22, 1999, was received:                       
                                                                               
"Dear Speaker Porter:                                                          
                                                                               
Under the authority vested in me by art. II, sec. 15 of the Alaska             
Constitution, I have vetoed the following bill:                                
                                                                               
CS FOR HOUSE BILL NO. 199(FIN)                                                
"An Act relating to compensation for certain state employees; and             
providing for an effective date."                                              
                                                                               
State employees voted in 1980 to opt out of the federal Social Security        
system, in exchange for the Supplemental Annuity Plan (a component             
of the Supplemental Benefit System).  This bill would set up another           
"tier" of benefits for some employees by reducing the state's                  
contribution to the Annuity Plan by half for all new employees.  The           
                                                                               

1999-07-28                     House Journal                      Page 1796
HB 199                                                                       
                                                                               
State already has three "tiers" of employees receiving differing benefits      
resulting from retirement program changes in 1986 and most recently            
in 1996.                                                                       
                                                                               
                                                                               
When compared to other states, Alaskan municipalities, the federal             
government and larger private companies in Alaska, the State of                
Alaska retirement benefits are not out-of-line or overly generous.  In         
fact, Alaska currently ranks 27th among other states for employer              
retirement costs as a percentage of employee salary.  Most                     
municipalities in Alaska participate in either Social Security or the          
state Annuity Plan in addition to participating in the Public Employees'       
Retirement System (PERS).  Participation in the Annuity Plan is                
actually less costly than the employer's social security contribution.         
The costs of retirement benefits paid by the federal government and            
many larger private employers in Alaska also exceed retirement and             
Annuity costs currently paid by the state.                                     
                                                                               
                                                                               
Reducing state employee benefits legislatively to a level substantially        
below most other Alaskan public and larger private employers, without          
offering mitigation through improved wages or other monetary offsets,          
will seriously jeopardize the state's ability to attract and retain qualified  
individuals to state service.  It will also hamper the state's ability to      
reach negotiated agreements with employee unions through collective            
bargaining.                                                                    
                                                                               
                                                                               
While the administration has and continues to support the amendments           
to the geographic pay differential proposed in this legislation to create      
parity among state employees, I find the changes to the Supplemental           
Annuity Plan to be so significant as to require a veto of this bill.           
                                                                               
                                                                               
							Sincerely,                                                              
							/s/                                                                     
							Tony Knowles                                                            
							Governor"