Navarre:POMV concept will work

Posted: Monday, March 08, 2004

Two of the four Kenai Peninsula delegates to last month's Confer-ence of Alaskans said Wednesday that applying the percent of market value (POMV) formula to the Alaska Permanent Fund is the best way to ensure the fund's long-term financial security.

"I think if Alaskans understand the percent of market value, they will overwhelmingly support it, because it makes sense," former Kenai Peninsula Borough Mayor Mike Navarre told the chamber.

Navarre, along with Soldotna City Council member Lisa Parker were the guest speakers at the Kenai Chamber of Commerce luncheon last week. Last month, they joined Kenai insurance agent Kristi Leaf and Halibut Cove's Clem Tillion, a former state senator, as the four peninsula representatives at the conference.

Navarre told the chamber he believes the conference was a success, if only for the fact that the 55 delegates were able to agree unanimously on a letter outlining five solutions needed to address the state's permanent fund and fiscal gap questions.

"That is actually amazing to me," Navarre said.

Parker told the chamber that the conference began with many delegates concerned it was simply a guise for figuring out how to take away Alaskans' annual permanent fund dividend checks. Once delegates realized the POMV plan isn't such a scheme, she said the delegates were able to engage in productive dialogue.

"Once people realized we weren't there to steal the dividend away from the people of Alaska, the tenor changed," Parker said.

The letter the conference put out called for long-term protection of the dividend program, something Parker said is essential to the state's economic and social health, and something she believes should be protected.

"Put it in the constitution let's put it to bed," she said.

The POMV plan endorsed at the conference calls for a change in the way the state divvies up cash from the $28 billion fund. Under the current system, the fund's investment profits over the previous five years are averaged, then divided in half. Once expenses are taken out, what remains is divided among Alaskans and paid out as the dividend.

Under the POMV plan, the total fund value over the past five years would be averaged, and 5 percent of that would be made available for state spending or dividends. The plan already has been endorsed by the Alaska Permanent Fund Board of Trustees as a way to guarantee "inflation-proofing" of the fund based on a historical 8 percent return on the fund's investments.

Navarre said he believes the plan is essential because it puts inflation proofing into the equation, ensuring the fund balance continues to be protected.

"POMV changes the system so inflation proofing the permanent fund becomes the first and most important priority," he said.

Those critical of the plan have said it would give the Legislature a way to take away the dividend and spend the 5 percent to fund government. However, Navarre pointed out the Legislature already has the authority to spend money from the fund's earnings reserve account, and POMV simply decreases the volatility inherent in relying on the stock market to pay dividends.

"We ought to take the volatility out of it," he said. "And that's what percent of market value does."

Not everyone is supportive of the plan. A coalition called "Alaskans, Just Say No" was formed in January to fight the plan, calling it an attack on the dividend. That group includes chair Eddie Burke, an activist who helped defeat a 1999 ballot measure that helped defeat a measure to spend some of the fund's earnings for state government; Wasilla legislator Vic Kohring; and former Kenai Sen. Jerry Ward.

Navarre took time to address criticism of the plan Wednesday, saying those who oppose it do not understand fully what POMV aims to do.

"Those that are opposed to percent of market value, I believe, don't understand it," he said.

Both Parker and Navarre said they believe the state needs to take action on the POMV plan soon, either through legislative action or a vote of the people.

"I think the time is now to take a first step," Navarre said.

Parker agreed and urged state legislators to make an effort now to find solutions to the state's fiscal gap whether that means finding new revenue sources or using part of the fund.

"Do what's going to be good for your community, what's going to be good for your state," Parker said.

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