Bill to draw from Permanent Fund released

JUNEAU (AP) — Alaska House and Senate negotiators on Wednesday unveiled a proposal that would limit draws from Alaska Permanent Fund earnings. But it would leave the fight over the size of future dividends paid to residents from the oil-wealth fund to future legislatures.

Lawmakers plan to use fund earnings for the first time to help fill a persistent state budget deficit. The annual dividends paid to residents also come from fund earnings, making the issue politically tricky to navigate — particularly in an election year.

The conference committee draft would limit what can be drawn annually from fund earnings to pay for government and dividends, based on a percentage of the fund's average market value over five years.

But it does not get into how the draw should be divvied among government and dividends.

Lawmakers plan to discuss the proposal among their respective caucuses.

Pat Pitney, Gov. Bill Walker's budget director, said by email that the proposal is a responsible approach, writing that it addresses "the most important item, protecting the fund's real value for the long-term."

But Sen. Bill Wielechowski, an Anchorage Democrat, opposes the proposal, saying it leaves the dividend more vulnerable.

The size of this year's dividend is generally considered settled at $1,600, the amount the House and Senate each included in their version of the state operating budget. Walker also has said he supports that amount.

That's about $1,000 less than Alaskans would have gotten if the statutory calculation was followed. Critics of a full dividend this year said it would have been fiscally reckless.

The statutory dividend formula also was ignored the past two years amid gridlock over how to resolve the deficit, first by Walker, then by lawmakers.

Wielechowski said the law should be followed.

"If the Legislature wants to fool around and think they can be cute and fundamentally change a program, probably the most popular program in the United States, without significant repercussions from the electorate, I think they're wrong," he said.

Alaska voters will have the final say on the dividend, said Wielechowski, who believes it will wind up in the constitution eventually.

The tone of this session has been less antagonistic than last year, which was marked by fights over taxes.

Still, lawmakers worked past the 90-day, voter-approved session limit, which was reached in mid-April. The constitutional permits sessions of up to 121 days, a limit two weeks away.

House Speaker Bryce Edgmon said there's been good cooperation among lawmakers as they try to close the extended session.

The Dillingham Democrat said lawmakers have been trying to resolve technical challenges with the Permanent Fund bill and another measure that would allow for issuance of bonds to pay Alaska's oil and gas tax credit obligations.

The state operating and capital budgets also remain unresolved.

The House Finance Committee advanced the bonding bill, proposed by Walker, on Wednesday, with Attorney General Jahna Lindemuth seeking to allay constitutional concerns that have been raised with the proposal.

If the bonding bill passes the House, it would still have to go to the Senate.

Senate President Pete Kelly, a Fairbanks Republican, said the Permanent Fund bill is the Republican-led Senate's major focus.

 

Updated: 
05/03/2018 - 9:53am

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