Bill would put more in state budget, less in savings

Posted: Wednesday, March 14, 2001

JUNEAU (AP) -- Rep. Norm Rokeberg thinks the state general fund needs extra cash more than the Alaska Permanent Fund does.

The Anchorage Republican is sponsoring a bill to put only 25 percent of royalties from newer oil fields in the permanent fund instead of the current 50 percent.

The change would add an average of $29 million a year to the general fund -- which pays for much of state government's activities -- over the next 13 years, Rokeberg said. About $40 million more would go into the general fund next year.

House Bill 3, which passed the House State Affairs Committee on Tuesday, does this by treating newer oil fields the same as older ones, Rokeberg said.

The state Constitution calls for socking away 25 percent of the state's share of oil field profits into the permanent fund, the state's oil-wealth savings account. Legislators decided in 1980 to put even more into the permanent fund from newer fields, upping the fund's share to 50 percent for fields such as Alpine and North Star.

The change reduced the amount going into the general fund. The idea made sense at the time, Rokeberg said, because the state had a much fatter general fund -- $4.07 billion.

''I think that was the right thing to do, but it's 21 years now since that was enacted and we have a clear cash flow and spending deficit in our budget deliberations,'' Rokeberg said.

The general fund now is just about $2.2 billion, and the state has to dip deeply into its Constitutional Budget Reserve savings account most years to balance its budget. This year's draw is expected to be about $500 million.

The change will have little affect on the permanent fund dividends residents receive each year, Rokeberg said.

The Permanent Fund Corporation estimates the change would have no effect until 2006, then would cause dividends to drop by about $10 a year for three years, then $20 a year for the following three years.

''I think it's certainly justifiable given our financial situation right now,'' Rokeberg said.

Rep. Jeannette James, R-North Pole, said she likes the idea. She believes the state needs a long-term plan to close its budget gap through Permanent Fund earnings, taxes and economic development. Although the change doesn't provide nearly enough money to close the gap, it's a good first step, she said.

Committee members Gary Stevens, R-Kodiak, also supported the change, saying it's sound fiscal management.

Rep. Harry Crawford, D-Anchorage, disagreed. He said the current generation of Alaskans isn't paying its fair share of the cost of government.

''If we pass this bill, we're taking money off of future generations,'' Crawford said.

Committee Chairman John Coghill, R-North Pole, also didn't like the bill because he believes government is too large and adding more money to the general fund will discourage fiscal discipline.

The measure next goes to the Judiciary Committee. It's similar to a bill introduced by Rokeberg that made it through the House and part of the way through the Senate in 1999.

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