Alaska Legislature Adopts Governor Walker’s Permanent Fund Protection Act - P.O.W. Report

Wednesday, May 9, 2018

Alaska Legislature Adopts Governor Walker’s Permanent Fund Protection Act


Senate Bill 26 ensures sustainability of fund, dividend program, critical services

MAY 8, 2018 JUNEAU – The House of Representatives and Senate on Tuesday voted to pass a compromise version of Senate Bill 26, Governor Bill Walker’s Permanent Fund Protection Act.

The most important aspect of the passed version of S.B. 26 is that it establishes a statutory limit on the amount that can be drawn from the Permanent Fund earnings reserve each year.

Governor Walker released the following statement:

“This landmark legislation is a major step toward ensuring that the fund — and the dividend program — will remain permanent. By stabilizing revenues, we secure Permanent Fund dividends for our children and grandchildren, and ensure services provided by the Alaska State Troopers, road maintenance crews, and teachers will continue for generations.

S.B. 26 lays the foundation for our economy to grow and prosper. It provides for efficient investment of the Permanent Fund, improves the state’s position in financial markets, and perhaps most importantly, allows Alaskans to be fully confident in the future of their households and their communities.

This historic policy was achieved thanks to broad support in the House and Senate, from Democrats, Republicans, and Independents.” – Governor Bill Walker

Why is it that when politicians say things like "Protection" it actually means the opposite?


So, this bill doesn't 'protect' the pfd. It actually protects Alaska's over spending and 'protects' them from having to make any substantial budget cuts.




KTOO
Alaska’s state government is spending $2.4 billion more than it’s bringing in, in taxes, fees and oil royalties. And the piggy bank it’s used to cover past deficits – the Constitutional Budget Reserve – is low.

The bill draws roughly 5 percent of the fund’s market value.

“SB 26 does not specify how these funds are to be split,” Foster said. “That will be left to future legislatures to determine.”

In the Senate, Eagle River Republican Sen. Anna MacKinnon said limiting the draw prevents the Legislature from spending down fund earnings so that dividends disappear.

“The bill before us guarantees Alaska’s dividends into the future, for my children and my grandchildren,” MacKinnon said.

But the effect on PFDs concerns some bill opponents. They’re split between Republicans who want deeper cuts to government services and Democrats who want some combination of higher oil and gas taxes and an income tax to shore up the budget.

Juneau Democratic Rep. Sam Kito III said the state should look at more taxes, since Alaska can’t rely on oil revenue.

Rep. Sam Kito III, D-Juneau

“We need to start being adults, and figuring out what do we want as a state government, then figuring out how we’re going to pay for it, instead of continuing to try and milk a cow that right now is – I’m worried about — getting way too skinny,” he said.

North Pole Republican Rep. Tammie Wilson said she’s concerned that spending will squeeze out the dividend once the Constitutional Budget Reserve is spent.

“I have seen nothing in the history since I have been here that shows that we will be able to stop spending money,” she said. “And at this point, all I can use is the budget that we currently have before us. And with this bill passed as is – and no Constitutional Budget Reserve – then there would not be any more than a couple hundred dollars left for the dividend.”

Even with the earnings draw, next year’s budget will have a roughly $800 million gap. The Legislature will likely turn to the CBR to close the gap. But it won’t have that option for many more years.

Dividends would be $1,600 this year under the House and Senate budget proposals. For the third straight year, dividends would be more than $1,000 less than they would be under the formula written into state law.

Our Favorite Rep. Kreiss-Tomkins voted for it!




YEAS: 29 NAYS: 11 EXCUSED: 0 ABSENT: 0

Yeas: Birch, Chenault, Claman, Drummond, Edgmon, Foster, Gara,
Grenn, Guttenberg, Johnston, Josephson, Kito, Knopp, Kopp,
Kreiss-Tomkins, Lincoln, Millett, Ortiz, Pruitt, Saddler, Seaton,
Spohnholz, Stutes, Talerico, Tarr, Thompson, Tuck, Wool, Zulkosky

Nays: Eastman, Johnson, Kawasaki, LeDoux, Neuman, Parish,
Rauscher, Reinbold, Sullivan-Leonard, Tilton, Wilson

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