Legislature(2025 - 2026)SENATE FINANCE 532
04/03/2025 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Department of Revenue – State Debt Summary and Credit Review | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| = | HB 56 | ||
SENATE FINANCE COMMITTEE
April 3, 2025
9:32 a.m.
9:32:03 AM
CALL TO ORDER
Co-Chair Hoffman called the Senate Finance Committee
meeting to order at 9:32 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Mike Cronk
Senator James Kaufman
Senator Jesse Kiehl
Senator Kelly Merrick
MEMBERS ABSENT
None
ALSO PRESENT
Fadil Limani, Deputy Commissioner, Department of Revenue;
Ryan Williams, State Debt Manager, Department of Revenue.
SUMMARY
HB 56 APPROP: SUPPLEMENTAL; FUND CAP
HB 56 was SCHEDULED but not HEARD
PRESENTATION: DEPARTMENT OF REVENUE STATE DEBT SUMMARY
and CREDIT REVIEW
Co-Chair Hoffman discussed the agenda.
^PRESENTATION: DEPARTMENT OF REVENUE STATE DEBT SUMMARY
and CREDIT REVIEW
9:33:12 AM
FADIL LIMANI, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE,
introduced himself and his team.
9:33:58 AM
Mr. Limani discussed a presentation entitled "State of
Alaska - Credit Rating Outlook and Debt Summary" (copy on
file). He looked at slide 2, "Introductions:
Fadil Limani
Deputy Commissioner, DOR
Ryan Williams
State Debt Manager
Mr. Limani spoke to slide 3, "Framework
o Recent Bond Refinancing Transactions
o State's Bond Rating Overview
o State's Recent Bond Rating Improvements
o Credit Rating and Market Feedback
o Current Municipal Market Update
o State's Debt Profile
o State's Debt Capacity
9:34:41 AM
Mr. Limani referenced slide 4, "State of Alaska Recent Bond
Refinancing Transactions
Summary of Bond Refinancing Transactions
• In the last year, DOR has successfully undertaken
five refinancing transactions
• Total par amount $582,990,000
• Total net present value savings $36,893,604
• Release of Debt Service Reserve Fund for Airport
System Refinancing Transaction $7.5 million
Mr. Limani reiterated that his office had been very busy
with aggressive measures over the previous fiscal year to
refinance the states outstanding debt. He conveyed that
historically the state had done one to two transactions,
every other year, but in 2025 the department had executed 5
transactions within the last five months.
9:37:34 AM
Mr. Limani turned to slide 5, " State of Alaska Recent Bond
Refinancing Transactions
General Obligation Refunding Bonds-Series 2024 A
Build America Bonds
Refund all the State's outstanding General Obligation
Bonds Series 2010 A Build America Bonds (BABs)
• State of Alaska exercised optional extraordinary
provision
• Par Amount of Refunded Bonds$119,570,000
• Tax-Exempt Refinancing from the previously issued
taxable BABs
Transaction Highlights
• Gross Savings $4,506,834
• Net Present Value Savings $3,999,992or3.35percent
• Subscription Levels $578 Million
o 5.4X across the board
Mr. Limani he said that in previous testimony the
Legislative Finance Division (LFD) alluded to the
departments intent surrounding the refinancing
transactions, suggesting that while the department was
looking toward net present value savings while extending
the maturities of the debt. He contended that this was not
that case. He said that the debt had not been restructured
or extended. He recounted that the Build America Bonds
(BAB) had been issued in 2010 as part of the ARRA following
the 2008-2009 financial recession.
Mr. Limani said that the subsidy rates had been reduced
year over year starting in 2013, prompting states to worry
about the subsidy rates over time. He stated that following
the court ruling, there was an opinion issued by bond
councils across the country, which referenced a provision
that allowed for extraordinary redemption provision. The
provision allowed debt to be retired. The bonds had been
taxable when issued, and the state saved approximately $4
million by taking the debt at that time.
9:40:56 AM
Mr. Limani continued that since refinancing significant
savings had been realized.
9:41:56 AM
Mr. Limani considered slide 6, "State of Alaska Recent Bond
Refinancing Transactions Cont.
General Obligation Refunding Bonds Series 2024B and
2025A
Refund all the State's outstanding General Obligation
Bonds Series 2015B and 2016 A&B Bonds
• Par Amount of Refunded Bonds$190,430,000
• $82,940,000 General Obligation Refunding Bonds-
Series 2024B (Bond Tender)
• $107,490,000 General Obligation Refunding Bonds
Series 2025A (Forward Delivery)
• Tax-Exempt Refinancing
Transaction Highlights
Aggregate Net Present Value Savings
$16,533,796or8.10percent
Series 2024B (Tender) $8,236,891 or 9.14percent
Series 2025A (Forward Delivery) $8,296,904 or 7.29
percent
• Subscription Levels $1,210,400 billion
o 6.3 times across the board 35 Investment
Groups (i.e., Vanguard, Fidelity, Susquehanna,
JPMIM, Brown Brothers, Blackrock)
9:45:03 AM
Mr. Limani displayed slide 7, "State of Alaska Recent Bond
Refinancing Transactions Cont.
Alaska International Airport System
Refund all the Airport System's 2016A&B Bonds
• Par Amount of Refunded Bonds$117,960,000
o $67,750,000 Revenue Refunding Bonds 2025A Bonds
(Bond Tender)
o $50,210,000 Revenue Refunding Bonds 2025B Bonds
(Forward Delivery)
o Tax-Exempt Refinancing
Transaction Highlights
• Aggregate Net Present Value Savings
$8,876,618or6.53percent
o Series 2025A (Tender) $5,303,723or7.16percent
o Series 2025B (Forward Delivery)
$3,572,895or5.77percent
o DebtServiceReserveFundRelease$7.5million
• Subscription Levels $696.2 million
o 5.9 times across the board 31 Investment
Groups (i.e., Vanguard, Fidelity, Wilmington
Trust, Brown Brothers, Boston Company, Capital
Research and Management)
9:47:14 AM
Mr. Limani highlighted slide 8, "State of Alaska Recent
Bond Refinancing Transactions Cont.
Goose Creek Correctional Facility
Refund lease revenue refunding bonds 2025A&B Bonds
• Par Amount of Refunded Bonds$99,460,000
o $63,025,000 Lease Revenue Refunding Bonds 2025A
Bonds (Bond Tender)
o $36,435,000 Lease Revenue Refunding Bonds 2025B
Bonds (Forward Delivery)
o Tax-Exempt Refinancing
Transaction Highlights
• Aggregate Net Present Value Savings
$5,589,231or5.35percent
o Series 2025A (Tender) $3,745,758or5.63percent
o Series 2025B (Forward Delivery)
$1,843,472or4.85percent
• Subscription Levels $106.6 million
• 1.1 times across the board 11 Investment Groups
(i.e., J.P. Morgan, Vanguard, Breckenridge Capital,
Goldman Sachs, PIMCO)
9:48:26 AM
Senator Kiehl asked about the initial net administrative
balance to refinance.
Mr. Limani deferred to Mr. Williams.
RYAN WILLIAMS, STATE DEBT MANAGER, DEPARTMENT OF REVENUE,
recalled that the bonds were initially issued in 2008, and
refinanced in 2015 and 2016. He said that at each of points
in time, when the bonds were refunded, there had been
advantageous savings on the annual payment. He offered to
get back to the committee with information on the exact
interest rate.
Senator Kiehl asked about the duration of the debt.
Mr. Williams believed it might have been 25 years. There
was a ten-year call, and in 2015 and 2016 bonds could still
be advance refunded. He said that the department had
recently undergone the tender and forward delivery
transaction in anticipation of the upcoming call date of
the 2015 bonds.
Senator Kiehl thought the transaction had a 1.1-time
subscription level while the others had 5 and 6. He asked
if the difference signified that that the state hit the
pricing right.
Mr. Limani relayed that many of the other transactions had
been earlier in the year and The Goose Creek Correctional
transaction had been more recent. He lamented that the
market had been volatile due to the current
administrations tariffs. He stated that the treasury
market had been all over the place. He said that when the
bonds had been well timed.
9:51:47 AM
Mr. Williams added that some investors did pass on prison
credits. He said that purchase of the prison bonds versus
GO bonds there could be different sentiment.
9:52:10 AM
Senator Kiehl asked whether there was any reflection on
pricing when considering demand.
Mr. Limani noted that there was a process for pricing. He
said that based on the market feel, prices were set on the
bonds. He said that variable prices were the trend, but
fixed pricing still existed. With the Goose Creek
transaction, the department had gone aggressive early in
the process. He said that the state had maximized on the
savings. He spoke to the 5 and 5 subscription levels. He
said that if many investors were interested in the bonds,
the state would negotiate the ricing upward. He said that
the pricing was market driven.
9:54:50 AM
Mr. Limani looked at slide 9, "State of Alaska Recent Bond
Refinancing Transactions Cont.
Alaska Municipal Bond Bank
General Obligation and refunding bonds 2025 Series
One and Two
• Par Amount of Refunded Bonds$55,570,000
o $41,900,000 General Obligation and Refunding
Bonds, 2025 Series One
o $13,675,000 General Obligation and Refunding
Bonds, 2025 Series Two
o Tax-Exempt Refinancing
Transaction Highlights
• Aggregate Net Present Value Savings
$1,893,967or3.8percent
o 2025 Series One $1,790,158 or 3.9 percent
o 2025 Series Two $105,866 or 2.1 percent
• Subscription Levels $198 million
o 3.5 times across the board 10 Investment
Groups (i.e., Breckenridge Capital, PIMCO,
Fidelity, Vanguard, Appleton, Loomis, Norther
Trust)
9:56:17 AM
Mr. Limani addressed slide 10, " State's Bond Rating
Overview
Bond Rating General Information
A bond rating is a way to measure the creditworthiness
of a bond, which corresponds to the cost of borrowing
for an issuer. These ratings typically assign a letter
grade to bonds that indicates their credit quality.
• Bond ratings are provided by third-party independent
rating agencies such as:
Standard & Poor's Global Ratings
Moody's Investors Service
Fitch Ratings Inc.
Kroll Bond Rating Agency
• Rating Agencies conduct a thorough financial
analysis of the issuer based on their published
Public Finance Criteria that generally focus on
different but similar primary credit factors.
Government Framework
Financial Management
Economy
Budgetary Performance
Debt and Liability profile
• Bond ratings are critical to alerting investors to
the quality and stability of the bonds and the
issuer.
Higher rated bonds "investment grade" provide lower
risk and lower borrowing cost
Lower rated bonds "non-investment grade" provide for
higher risk and higher borrowing cost
Bond Rating General Information
9:58:47 AM
Mr. Limani advanced to slide 11, " State's Bond Rating
Overview
Importance of Credit Ratings to State of Alaska
• Cost of borrowing on capital improvement projects
• State bond rating benefits and/or impacts the Alaska
Municipal Bond Bank and underlying issuers
• Positive bond ratings attract national and global
investors to the State
10:00:19 AM
Mr. Limani looked at slide 12, "State's Bond Rating
Overview Bond Rating Scale," which showed an illustration
of the bond rating scale, including Kroll, Moody's, S&P,
and Fitch. The agencies had their own criteria and differed
slightly. He noted that the evaluation metrics could be
different but all focused on government framework,
financial management, and budgetary performance.
10:01:05 AM
Mr. Limani showed slide 13, " State's Credit Rating
Improvements
Over The Last Year, We Have Seen Six Credit Rating
Improvements
Department of Revenue engaged Kroll Bond Rating Agency
(KBRA) in 2023.
• KBRA assigned an AA (Stable Outlook) to the State's
General Obligation Bonds and AA- for the Alaska
Municipal Bond Bank Authority.
• In connection with the 2024 A Bonds transactions,
the State saw credit improvements.
o S&P improved the State's rating from AA- to
AA with Stable outlook.
o Moody's improved the State's rating from Aa3
Stable to Aa3 Positive.
• On March 4, 2024, Moody's upgraded the State of
Alaska Airport System Revenue Bonds to Aa3 from A1
with Stable outlook.
• On February 25, 2025, KBRA upgraded the State of
Alaska General Obligation Bonds to a rating of AA+
with a stable outlook. Highest Bond Rating Since
2016.
Mr. Limani discussed efforts to obtain state credit rating
improvements. He stated that messaging had been tailored to
conform with rating agency criteria. He said that Alaska
was a unique credit and agencies often had to use a
separate criterion due to Alaskas uniqueness.
10:03:40 AM
Mr. Limani referenced slide 14, "Recent Bond Rating
Meetings-Credit Summary:
Diversified and Resilient Revenue Streams
Significant project developments to build and
diversity State revenue stream
Percent of market value transfer has been in place
for seven fiscal years and is a consistent source of
unrestricted general fund (UGF) revenue
Total petroleum revenue was 37.2 percent of UGF in
FY2024 and is estimated to be 29.7 percent in FY2025
Deeply Experienced Management and Highly Conservative
Debt Program
30+ years of combined experience between Deputy
Commissioner Limani and Debt Manager Williams
Commitment towards a sustainable and long-term
comprehensive Fiscal Plan
Present value savings of over $36.9 million achieved
since June 2024 through issuance of general obligation
and revenue refunding bonds
Fiscal Discipline
Demonstrated commitment to structural budgetary
balance, including expenditure constraints
Semi-annual revenue forecast that includes outlook
for oil price, oil production, and state revenues
Annual public debt report, including debt management
policy and debt affordability analysis
Very Strong Financial Position
Ample Reserves: Constitutional Budget Reserve Fund
(CBRF) $2.8 billion, Permanent Fund balance $80.8
billion
Low debt load and no new bond authorization
Rapid paydown of general obligation debt in the next
10 years
Well-funded pension obligations PERS 89 percent
and TERS 95 percent
10:07:50 AM
Mr. Limani continued to address slide 14:
Robust Outlook for Near-Term, Statewide Economic
Development
Executive Orders will expand immense opportunities
and ensure the nation's energy security
Prominent ongoing resource development projects
impacting economic growth
Improved economic demographics
10:08:45 AM
Senator Merrick noted that the governor had proposed using
about half of the Constitutional Budget Reserve (CBR) to
fill the deficit. She wondered whether that would affect
the bond rating.
Mr. Limani relayed that the CBR was one element of the
rating agency perspective. He thought that it was hard to
distinguish how using the CBR would affect the rating. He
said that rating agencies would take a holistic view of the
states finances. He thought it was hard to pinpoint an
impact due to other factors. He felt depletion of financial
resources would be an indicator that would be examined to
determine the financial health of the state.
10:10:23 AM
Mr. Limani turned to slide 15, "State's Bond Rating
Overview," which had a snapshot of the historical ratings
for the state:
Moodys Investor Service
July 13, 1961 Baa
September 12, 1969 Baa1
August 29, 1974 A1
June 13, 1980 Aa
November 26, 1998 - Aa2
November 22, 2012 Aaa
February 29, 2016 Aa1
July 25, 2016 - Aa2
July 13, 2017 Aa3
S&P Global Ratings
June 4, 1971 A
January 23, 1975 A+
Juneau 14, 1980 AA-
August 5, 1992 AA
March 27, 2008 - AA+
January 5, 2012 AAA
January 5, 2016 AA+
July 18, 2017 AA
April 17, 2020 AA-
April 30, 2024 - AA
Fitch Ratings
May 3, 1994 - AA
March 25, 2010 AA+
January 7, 2013 AAA
June 14, 2016 AA+
November 2, 2017 - AA
September 5, 2019 AA-
May 6, 2020 A+
Kroll Bond Rating Agency
July 20, 2023 - AA
February 25, 2025 AA+
• July 20, 2023: Initiation of "AA" rating on State GO
Debt by Kroll Bond Rating Agency
• April 30, 2024: Upgrade by S&P Global Ratings to
"AA," Outlook revised to Stable
• March 4, 2024: Outlook revised to Positive by
Moody's Investor's Service, "Aa3" rating maintained
• September 27, 2024: Outlook revised to Positive by
Fitch Ratings, "A+" rating maintained
• February 25, 2025: Kroll Bond Rating Agency upgraded
the State of Alaska General Obligation Bonds to a
rating of AA+ with a stable outlook
Mr. Limani said that in 2018-2019, there had been an
analyst from Fitch Ratings that had taken exceptions to
some of the state's budgetary policies and had done forward
looking assessments that had then been reflected into the
credit profile. Mr. Limani shared that the practice was
questionable and had led to the state receiving a lower
score. The analyst was no longer with Fitch, but the state
had not used them since 2020.
10:12:47 AM
Co-Chair Stedman noticed that back in 2010, Moody's had
given a AAA, and noted similar scored from S&P and Fitch.
He wondered how the state could get a AAA score form Kroll.
Mr. Limani thought there were some indicators provided
through feedback. He said having ample reserves and pension
system funding were a significant factor. He summarized
that there were many elements that were looked at when
determining the rating.
Co-Chair Stedman asked how the rating agencies dealt with
submitted budgets with a deficit and then later balanced.
Mr. Limani conveyed that rating agencies recognized that it
was a process. He said that ratings were based on the
information available when the budget was released on
th
December 15. He furthered that rating agencies followed
the budget through the legislative process as the
legislative branch worked to deliver a balanced budget.
10:15:54 AM
Senator Kaufman asked about the Improved economic
demographics bullet point on the bottom of slide 14.
Mr. Limani replied that historically the state had been
under the national average when it came to employment
opportunities in the state, unemployment, and GDP. He said
that fir the first time many of those trends were trending
above the national average, which was an indicator that the
stat was moving in the right direction.
Senator Kaufman thought it was nice to hear some good news.
10:17:04 AM
Senator Kiehl asked about the same point. He understood
from testimony earlier in the week that non-resident jobs
were up in all highest income industries, the working age
population was falling, and out-migration was slowing. He
wondered whether these things factored into the
demographics as defined by that bullet point.
Mr. Limani replied that employment numbers were above the
national average, much of it driven by projects on the
North Slope. He relayed that he was not sure how much the
rating agencies investigated the composition of the
workforce.
Senator Kiehl surmised that the rating was not a reflection
of the state's economy and demographics for residents.
Mr. Limani affirmed that agencies did look at the
overarching demographics, but he was uncertain as to the
level of granularity for each factor.
Senator Kaufman asked whether the bond markets had offered
feedback on what a good gas pipeline package would be
structured.
Mr. Limani responded that rating agencies had been
monitoring the gasline project for a while and had always
considered it in the long-term outlook for the state. The
current federal administration was excited about the
project, which had rating agencies attention. He said that
agencies were watching closely to see how the project
advanced.
10:21:20 AM
Senator Merrick asked whether rating agencies would have
access to the contract between Glenfarne and the Alaska
Gasline Development Corporation (AGDC) to examine the kind
of risk and liability state was taking on.
Mr. Limani responded that he could not answer the question.
He noted confidentiality provisions and said that the
rating agencies had not asked for the information.
10:22:14 AM
Mr. Limani considered slide 16, "State's Bond Rating
Overview," which showed where Alaska was in comparison to
other state's credit ratings.
10:22:43 AM
Mr. Limani displayed slide 17, " Credit Rating and Market
Feedback:
Initial Rating Agency Feedback
• Percent of Market Value (POMV) transfer has been in
place for seven fiscal years and is a consistent
source of UGF revenue
• Recent budgetary surplus and deposits to State
savings accounts, including the Constitutional Budget
Reserve Fund • Significant reduction in State general
fund spending since 2013
• Recently stable oil price environment and
significant available natural resources under
development
• Well-funded pension obligations
• Low debt load and no new bond authorizations, rapid
paydown of GO debt in the next 10 years
• Improved economic demographics
• Prominent ongoing resource development projects
impacting further economic growth
• Ample reserves and recent positive investment
performance
Market Feedback on Recent Transaction
• Institutional investors "love" Alaskan paper, very
high-quality credit, highly secured
• More frequency in the market and larger bond
issuances
10:24:09 AM
Mr. Williams highlighted slide 18, " Current Municipal
Market Update*," which showed already outdated information
due to rate volatility. He noted that there was about a 20-
basis point differential as of the current moment. The
chart and graphs offered a snapshot showing that rates were
still low but were higher than five years ago.
10:25:02 AM
Mr. Williams looked at slide 19, "State's Debt Profile,"
which offered a bulleted list of the authorization process:
• All forms of State debt are authorized first by law
May be a one-time issuance amount or a not-to-exceed
issuance limit in statute
General obligation bonds must then also be approved
by a majority of voters
o General obligation bonds are the only debt
secured by full faith credit and taxing
authority
• All State debt must be structured and authorized by
the State Bond Committee
Includes general obligation bonds, subject to
appropriation issues, and state revenue bonds
• The State Bond Committee determines method and
timing of debt issues to best utilize the state's
credit and debt capacity while meeting the
authorized project's cash flow needs
• The State has established other debt obligations
Reimbursement Programs
o The School Debt Reimbursement Program ("SDRP") or
HB 528 reimbursement, administered by Alaska
Department of Education and Early Development and
Department of Transportation and Public
Facilities, respectively
o SDRP: Not currently authorized for new debt
and periodically funded (was most recently
partially funded in 2017, 2020 and 2022, and
no appropriation in 2021; however,
supplemental budget appropriations offset
prior year reductions)
Retirement Systems
o Unfunded actuarially assumed liability (UAAL) for
defined benefit employees is guaranteed by the
constitution
o Annual payments on the UAAL of other employers is
reflected as State debt in the Annual
Comprehensive Financial Report (ACFR)
o Some flexibility in how payments are made
10:26:04 AM
Mr. Williams addressed slide 20, " State's Debt Profile
Types of Alaska Public Debt
• State Debt
• State Guaranteed Debt
• State Supported Debt
• Unfunded Actuarial Accrued Liability (UAAL)
• State Moral Obligation Debt
• State Supported Municipal Debt Eligible for State
Reimbursement
• State and University Revenue Debt
• State Agency Debt
• State Agency Collateralized or Insured Debt
• Municipal Debt
10:27:19 AM
Mr. Williams advanced to slide 21, "Debt Service Profile,"
which showed the types of debt obligation, par remaining,
int. remaining, year of final maturity, FY2025 UGF payment,
and total debt service to maturity. He noted that the "as-
of date" was February 1, 2025, which signified that the
payments had already gone out. The bottom of the slide
offered Debt Activity Updates:
Debt Activity and Updates
• On 6/4/2024, the State closed on the GO Series 2024A
Bonds, which refunded the outstanding GO Series 2010A,
which contained a Federal (Build America Bond)
subsidy. The state achieved total debt service savings
of approximately $4.5 million.
• On 8/15/2024, the State closed on the GO Series
2024B Bonds, and on 8/6/2024, the state priced the GO
Series 2025A Bonds (Forward Delivery) to refund the
outstanding GO Series 2015B, 2016A, and 2016B Bonds.
Upon closure of the GO Series 2025A (Forward
Delivery), the overall transaction reduces total debt
service payments over the next 12 years by
approximately $19.5 million.
• SDRP Update: The enacted fiscal year 2025 budget
funded the SDRP program at 100%, with an appropriation
of approximately $57.5 million to the Department of
Education and Early Development, including an
estimated $44.4 million from UGF and $13.1 million
from the School Fund.
10:28:13 AM
Co-Chair Stedman asked to go back to slide 20. He reflected
that it would be nice to put a numeric value to the public
debt types listed on the slide. He thought that this would
give a better picture of the various debt levels.
Co-Chair Hoffman agreed.
Mr. Limani agreed to provide the information to the
committee.
10:28:50 AM
Mr. Williams looked at slide 22, "Debt Service Profile:
Recent Activity:
o The State does not have unissued GO bonding
authority and the State's remaining 2012 GO bond
authorization was sold in FY2021 ($453.2 million
funded since 2012)
o Net debt service of $64.2 million in FY2025
declining to final payment of $6.1 million in
FY2041bonds outstanding decline through FY2041
Mr. Williams commented on the total general obligation debt
currently outstanding as of February 1, 2025. He discussed
the 10-year paydown of 86.8 percent of total outstanding
principal and highlighted the annual GO debt service by
fiscal year in the millions.
10:29:25 AM
Co-Chair Stedman referenced the chart on the lower left,
which showed the 10-year paydown. He thought it would be
helpful to know the previous debt levels, prior to FY2025.
Mr. Williams agreed to provide the information.
10:29:58 AM
Mr. Williams spoke to slide 23, "State's Debt Profile,"
which showed an excerpt from the Alaska Public Debt Book.
He listed the numerical values for each individual type of
state debt, specifically the principal outstanding
debt(millions)as of June 30, 2024:
State Debt
State of Alaska General Obligation Bonds - $523.5
State Guaranteed Debt
Alaska Housing Finance Corporation Collateralized
Bonds (Veterans Mortgage Program) - $86.5
State Supported Debt - $149.5
State Supported Municipal Debt $379.1
Pension System Unfunded Actuarial Accrued Liability -
$4,404.0
State Moral Obligation Debt - $1,179.7
State Revenue Debt - $227.9
University of Alaska Debt - $456.7
State Agency Debt - $1,464.8
State Agency Collateralized or Insured Debt - $1,292.5
Total State Agency Debt - $9,936.2
10:31:56 AM
AT EASE
10:32:04 AM
RECONVENED
Mr. Williams turned to slide 25, "State's Debt Profile,
which showed the total Alaska public debt, outstanding as
of June 30, 2024, at $11,627.2.
Mr. Williams considered slide 26, "State's Debt Profile,"
which addressed historical and future debt service:
• GF payment peaked in 2018 at approximately $229
million
• FY2025 GF Debt service payments include
approximately $87.0 million in State GO and State
Supported debt, and approximately $60.0 million
for State Supported municipal debt
• $683.7 million in remaining debt service to
maturity of outstanding GO debt (principal +
interest, as of June 30, 2024, and $599.9 million
as of February 1, 2025, unaudited)
He noted that the graphs on the right of the slide
illustrated the bullet points on the left-hand side.
10:33:29 AM
Co-Chair Stedman asked for Mr. Williams to enlarge the
graphs on slide 26.
Mr. Williams agreed.
10:33:49 AM
Mr. Williams displayed slide 27, "State's Debt Capacity,":
Debt Affordability Analysis
• Annual analysis required by AS 37.07.045 to be
delivered by January 31
• Discusses credit ratings, current debt levels,
history and projections
• Relies upon debt ratios, limit of four percent for
directly paid state debt, and seven percent when
combined with municipal debt that the state supports
• Identifies currently authorized, but unissued debt ?
Establishes refinancing parameters
• Determines a long-term debt capacity at current
rating level and debt profile
• Discusses, but doesn't define, a capacity for short-
term debt
• The 2024-2025 analysis determined that the State had
a debt capacity of approximately $1,625 million
Adjustments made to base analysis to account for
recognition of a POMV split for PFDs vs state
budget, recognition of special funding for PERS/TRS
and future budget uncertainty and volatility in the
State's revenue sources
Mr. Limani added that the estimated debt capacity for 2024-
2025 had increased approximately $2 million from the
previous year.
Co-Chair Hoffman asked Mr. Limani to provide the committee
with historical debt capacities for the previous decade.
Mr. Limani agreed.
10:35:15 AM
Senator Kiehl asked about more information on the debt
ratios.
Mr. Limani agreed to provide the information.
Mr. Limani showed slide 28, "Questions?":
Contact
Fadil Limani, DOR Deputy Commissioner
[email protected]
Ryan Williams, DOR Debt Manager
[email protected]
10:35:47 AM
Co-Chair Stedman wondered about the parameters for what the
state could or could not issue debt for.
Mr. Williams asked whether Co-Chair Stedman was looking for
what the state could issue debt for.
Co-Chair Stedman asked whether the state could borrow money
in the bond market for day-to-day operations.
Mr. Limani replied in the negative.
Mr. Williams relayed that the state could issue revenue
anticipation notes that would have to be paid back in the
following fiscal year.
Co-Chair Hoffman thought it should also be noted that GO
Bonds were issued by the legislature and went directly to
voters for approval. The bonds did not require the
governors approval.
10:38:06 AM
Senator Kaufman wondered if there were any recommendations
to help the state present well to the bond market.
Mr. Limani thought timing was significant. He said that an
understanding of which areas of the state would be the
focus and which projects.
Mr. Limani thanked the committee.
Co-Chair Hoffman discussed housekeeping.
ADJOURNMENT
10:40:25 AM
The meeting was adjourned at 10:40 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 040325 State Debt Summary and Credit Review S.FIN 04.03.25.pdf |
SFIN 4/3/2025 9:00:00 AM |
|
| 040325 DOR Response to SFIN Debt and Credit Presentation 4.14.25.pdf |
SFIN 4/3/2025 9:00:00 AM |