JUNEAU — A state Senate committee advanced legislation Friday calling for structured draws from Alaska’s oil-wealth fund to help pay for government as the state grapples with a multibillion-dollar deficit.
Debate in the Senate Finance Committee centered on whether the bill is the best approach to protect the Alaska Permanent Fund and whether it would constitute a balanced fiscal plan.
Committee Co-chair Anna MacKinnon, an Eagle River Republican, said she hopes the bill will have sufficient support to pass the Senate. A vote could come next week.
The bill would base draws on a percentage of the fund’s market value. It would cap the annual dividend Alaskans receive at $1,000 for the next three years. After that, dividends would be based on a portion of the draw.
The measure also seeks to limit future spending and anticipates a review of the use of fund earnings in three years.
Revenue Commissioner Randall Hoffbeck told the committee that the administration would recommend changes if it believes at any point the draw is too much. In an interview this week, Hoffbeck said he considered the bill workable.
Sen. Donny Olson, D-Golovin, said he worries there won’t be a political will to cut back if needed. Commissioners and administrations change, he said.
Hoffbeck noted that fund earnings have long been available to lawmakers to spend but they’ve shown restraint. To date, spending from earnings has been limited to things like the payout of dividends and money to inflation-proof the fund.
Sen. Mike Dunleavy, R-Wasilla, said the long-time understanding about not reaching for fund earnings has ended. Dunleavy, who favors a different approach than the one offered by Senate Finance, said he doesn’t think the earnings reserve is protected.
Senate Majority Leader Peter Micciche, a finance committee member, said going to use of permanent fund earnings to help cover state costs isn’t an easy choice.
The Soldotna Republican said legislators already have cut the budget substantially and will work to cut more. But he said there also are basic, constitutionally mandated services the state is to provide.
“Can anyone look me in the eye and tell me that we’re meeting our constitutional requirements today on delivering public safety in Alaska?” he asked.
He said the bill that advanced from committee will protect the permanent fund and ensure a perpetual dividend.
Whatever might pass the Senate will go to the House, where members of the largely Democratic majority have argued for a comprehensive fiscal plan that includes a broad-based tax and changes to oil tax and credit policy.
Leaders of the Republican-led Senate so far have shown no interest in taxes.