Bill would send some Permanent Fund earnings to communities

Posted: Wednesday, March 21, 2001

JUNEAU (AP) -- A bill that would send some Permanent Fund earnings to communities to pay for local projects cleared its first House committee Tuesday.

House Bill 20 would take an amount equal to $150 per Permanent Fund dividend recipient and distribute it to cities and boroughs to pay for police, fire, emergency medical services, road maintenance or other projects.

The sponsor, Rep. Carl Moses, D-Unalaska, said the funds would be paid out after money was set aside to inflation proof the Permanent Fund and to pay dividends.

He sponsored the same bill last session, which made it through two House committees before dying in House Finance.

Moses said by sending $90 million to communities, the bill would save Alaskans money on property taxes or sales taxes they otherwise have to pay for local services. Also, unlike Permanent Fund dividends, which the federal government taxes, the community dividends wouldn't be taxed. That would keep money in the state, he said.

The money would come not from the principal of the Permanent Fund, but from its earnings.

The Legislature has been plowing those earnings back into the fund, but Moses said it's time to stop doing that. Dividends Alaska residents receive based on the fund's performance are already too high, he said.

''There shouldn't be another dollar put in,'' Moses said. ''It's already a magnet to attract people into the state, the type we don't necessarily need, unproductive people.''

The Permanent Fund Corp. estimates the change would have no effect on dividends until 2003, when it would reduce the dividend per person by about $10. By 2011 dividends would be about $50 lower than they would otherwise have been.

The House Community and Regional Affairs Committee agreed Tuesday to move House Bill 20 on to the next of several committees it would have to clear to become law.

Rep. Kevin Meyer, R-Anchorage, was the only member recommending against its passage.

''It's just too soon after our vote on using the Permanent Fund, and it was such a resounding no,'' Meyer said. In a 1999 advisory ballot, Alaskans voted overwhelmingly against using Permanent Fund earnings to help pay for state government.

''I think the idea does have some merits and I think down the road it could be something included in a long-range fiscal plan that would make some sense, but as a stand-alone I'm not comfortable with it yet,'' Meyer said.

Under the bill, a community's share would be based on a number of factors, including the number of residents, the number of road miles and the number of hospital beds.

The smallest municipalities would receive at least $45,000 a year and unincorporated communities would get at least $10,000. The Village Public Safety Officer program, which provides police protection in rural Alaska, would receive $7.5 million.

The bill would replace the municipal assistance and revenue sharing program that now distributes money to communities. Those programs distribute about $70 million less than what they'd receive under Moses' plan.

Those recommending passage of the bill included Reps. Beth Kerttula, D-Juneau, Carl Morgan, R-Aniak, and Lisa Murkowski, R-Anchorage. Reps. Gretchen Guess, D-Anchorage and Drew Scalzi, R-Homer, had no recommendation.

The bill now goes to the House State Affairs Committee.



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