Is it a stroke of legislative genius, a shortsighted plan or just a new verse of an old tune?
Alaska legislators praised and criticized Rep. Jim Whitaker's pre-filed bill that proposes using the income from the Alaska Permanent Fund earnings reserve. The legislation would add half the investment income collected this year from the fund's earnings reserve account to the dividend payout, while the second half, reported to be approximately $200 million, would go into a capital projects fund.
Whitaker, R-Fairbanks, was out of state and unavailable for comment. However, staff member Ryan Colgan was careful to clarify that the bill focuses on "the earnings of the reserve account."
"That money would be split half toward capital projects and half toward a supplement to the dividend," Colgan said.
That supplement could increase the dividend dramatically.
Colgan said no specific capital projects were considered, "but rather the broad sense, growing and developing the infrastructure in the state of Alaska to facilitate economic growth."
Offering Alaskans an increased dividend and tapping into the earnings isn't a new idea.
"Obviously, what I put on the table got some discussion going," said Sen. Jerry Mackie, R-Craig.
In March, Mackie caused a stir by proposing to pay half the permanent fund's $27 billion in a one-time $25,000 dividend to each Alaskan and using the remaining dollars to balance the state's budget.
"Legislators can't continue to just ignore fiscal realities that our state will be facing, and I firmly believe, although I won't be in the Legislature anymore, that new ideas and options should be brought forth and fully debated," Mackie said.
Rep. Bill Hudson, R-Juneau, applauded Whitaker's proposal.
"Whitaker's bill is an effort to try and take care of two problems at one time," Hudson said. "We have excess earnings in the permanent fund. (Whitaker's) bill, on a one-time basis only, would take a portion of those excess earnings after inflation proofing and put them into the permanent fund dividend at a greater amount than you're getting at the present time. Instead of $2,000, the public may get up to $2,500, depending on how many apply for it and what the total pot of earnings is."
According to Hudson, Wilson Condon, commissioner of Alaska's Department of Revenue, has indicated the current fiscal year likely will have a surplus of approximately $150 million.
"That's the good news," Hudson said. "The bad news is that oil prices are not predicted to stay high. They are now predicted to be coming in at $26 a barrel, which means that in the coming budget year we'll be short of traditional revenue by approximately $500 million."
Hudson said he has worked closely with Whitaker over the last two years.
"We both believe that Alaska cannot sit on its hands just because we've had a windfall for the last year," Hudson said. "It's our responsibility to put before the public the facts as we see them. That's what the legislative process is all about."
Hudson also plans to introduce a bill similar to one he sponsored last year, focusing on inflation-proofing the permanent fund and making excess earnings available through a constitutional reserve for essential services, without changing the way the dividend is allocated.
Rep. Carl Moses, R-Unalaska, compared Whitaker's legislation to his own proposal. Moses' plan, also pre-filed, is to use the earnings to create a municipal dividend program, basing allocations to organized municipalities on population and specific funding formulas.
"Of course I'm biased," Moses said. "I'd rather see it done on a per capita basis and given back to local government so they can decide what capital projects they want to use it for. Or they could just put it in a savings account and maybe start a permanent fund on the local level."
Senate Majority Leader Loren Leman, R-Anchorage, predicted Whitaker's proposal and others that attempt to use the permanent fund's excess earnings will undergo careful examination.
"I'd say that the Legislature will scrutinize any ideas like (Whitaker's) or those from Moses or Hudson very carefully," he said.
Leman said a one-year plan may not be the wisest course of action.
"The whole idea of good fiscal management is to have a good long-term plan and plan out for several years," he said.
In the face of dwindling revenues, Sen. John Torgerson, R-Kasilof, also urged consideration of the big picture.
"I would rather look at a long-range plan for the state and how all of our money is going to enter into the scheme of things," he said. "Right now we're looking at a $514 million deficit. If we're deficit spending, it doesn't make a lot of sense to spend this money on other things. This is not the time to lose our cool."
Sen. Jerry Ward, a staunch defender of the permanent fund, boiled Whitaker's plan down to just another attempt to do away with the dividend.
"These are various ways to take the permanent fund dividend away from the people and give it to government because government thinks they know better," the Anchorage Republican said.
"You can't just take somebody's dividend away without paying a price. Is a capital project enough reason to take a dividend away? I don't think so."
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