House Finance takes up plan to dole out earnings to communities

Posted: Thursday, March 21, 2002

JUNEAU (AP) -- House budget leaders plan to use $59.3 million in Permanent Fund earnings to provide state assistance to local communities.

The House Finance Committee took up a bill Wednesday that would create a municipal dividend program for local governments.

House Bill 20 would use money from the Permanent Fund earnings reserve account to replace some state contributions to local governments. The bill, sponsored by Rep. Carl Moses, D-Unalaska, stalled in the House Finance Committee last session.

But committee Co-Chairman Eldon Mulder said it is a key feature in a House plan to cut state spending and devise revenue generating measures to begin closing a $1.1 billion budget shortfall.

Co-sponsors of the bill include Mulder and Reps. John Davies, D-Fairbanks; Richard Foster, D-Nome; Peggy Wilson, R-Wrangell; Bill Hudson, R-Juneau; Con Bunde, R-Anchorage; Gary Stevens, R-Kodiak; Reggie Joule, D-Kotzebue; Ken Lancaster, R-Soldotna; Jeannette James, R-North Pole and Mary Kapsner, D-Bethel.

The municipal dividend would replace about $49.3 million in state funds now paid to communities through several programs such as revenue sharing, community jails and safe communities. The bill increases the state's contribution to local communities by $10 million.

Moses' bill pays the communities from the Permanent Fund's earnings reserve account after dividends to Alaskans and inflation proofing.

The bill was amended Wednesday to increase the state's three-year contribution to local communities that organize into cities.

Bunde offered the amendment as an incentive to local governments to become incorporated, increasing the amount to $175,000. It would also pay $350,000 for communities to become home rule cities.

Supporters of the bill also staved off several other amendments that would have given more money to the University of Alaska and K-12 education, funded the senior property tax exemption and used Permanent Fund earnings for state government.

Lawmakers have never used the state's Permanent Fund earnings reserve account to pay for state government, but have instead put the money back into the fund. In a 1999 advisory vote, Alaskans overwhelmingly voted against using Permanent Fund earnings to help pay for state government.

House Finance Co-Chairman Bill Williams, R-Saxman, said he intends to move the bill to the full House before next week.

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