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Peninsula legislators disgree on POMV

Posted: Wednesday, May 05, 2004

State lawmakers representing the Kenai Peninsula are divided over the appropriateness and efficacy of the proposed percent-of-market-value approach to managing the Alaska Permanent Fund.

The April 26 vote in the Alaska House that succeeded in sending a POMV ballot measure (HJR 26) to the Senate found Rep. Paul Seaton, R-Homer, in support, but Reps. Mike Chenault, R-Nikiski, and Kelly Wolf, R-Kenai, opposed. HJR 26 would ask voters this fall to decide whether to change the Alaska Constitution and adopt the POMV approach.

Under the proposed amendment, 5 percent of the average fund value over the previous five years would be available for permanent fund dividends and certain government spending.

The three were similarly divided over House Bill 298, a measure that would write into statute the way the 5 percent could be used. It proposes that up to half the 5 percent would be set aside for dividends, up to 45 percent of it would go to public education, while the last 5 percent would be appropriated to municipalities and other communities.

The way it looks now, politics in the Alaska Senate make it unlikely Alaskans would get the chance to vote on the POMV approach. Sen. Tom Wagoner, R-Kenai, affirmed Monday what has long been known there simply aren't enough votes in the Senate to put the question on the ballot, at least not yet.

Wagoner, along with a majority of Senate members, opposes the POMV constitutional amendment, as well as the split outlined in HB 298. He said he is worried that the fund value aimed at education would encourage lawmakers to cut education funding from other sources. Funding municipalities, he added, runs counter to the purpose of the permanent fund.

"If we are going to do municipal revenue sharing, we should find another way," Wagoner said, adding that the permanent fund was never intended to pay for municipal services. He finds support in what he's hearing from his constituents, too, he said.

"Everyone I've talked to people say we don't see any problem with the permanent fund or the way it is handled currently," he said.

But Wagoner's colleague, Sen. Gary Stevens, R-Kodiak, is one of a minority of senators who favors the POMV and the proposed split. Should it defy the odds and actually pass and go to the voters, Stevens would be on the stump to push for passage.

"I've told the governor I will promote it if it goes to voters," he said. "The principle of the POMV method just makes sense. But I have to admit, it doesn't look real promising in the Senate."

Wolf said Monday that it was the hard lobbying done by Gov. Frank Murkowski that helped the measures win in the House and move to the Senate. Reticent to open the fund to legislative spending, Wolf finds some comfort in what he's hearing from the Senate side.

"It has no chance in hell. That's what I'm hearing," he said. "My problem is that I don't trust giving that kind of money to the Legislature without some ability to direct it. We need a spending plan."

Chenault said he agreed, in principle, with the methodology of the POMV, but not with the disbursement proposed in HB 298.

"It started as a 50/50 proposition half to education, half to dividends," he said. "Now they've taken 5 percent from education to go to municipal dividends."

Chenault worries that the 5 percent to cities might only be the beginning, and that further bites could be taken next year, or even next week.

"I can see the feeding frenzy starting," he said, as lawmakers begin eyeing the annual 5 percent of the fund made available by the POMV as a source of funding for pet district projects.

Seaton said he isn't concerned about the potential for further pie carving.

"It would take a significant amount of work and agreement to go back and change whatever percentages we come out with," he said. "They will be in statute, yes, but then the entire dividend is in statute. The idea that this is not a fixed decision is not reality. The Legislature has been careful in modifying any use of the permanent fund earnings or anything to do with the permanent fund. It's been conservative."

Seaton said putting the POMV question before the voters and showing them the intended 50/45/5-percent split written into HB 298 was an effort "that's really up front" with voters.

"All we are doing with this is letting the people vote," he added. "We are not taking an action."

Seaton said it would be regrettable if two proposed constitutional amendment bills sent to the Senate from the House (the POMV proposal and HJR 9, a measure setting a constitution spending limit) did not make it to the ballot.

There is somewhat more unanimity when it came to predicting the fate of the state's operating budget for fiscal year 2005, which starts July 1. Basically, the five said the final outcome is up in the air.

Wolf said it disappoints him that the Legislature started the session looking for places to cut, but abandoned that course in the light of currently soaring oil prices. Nevertheless, he joined his Republican colleagues, including Seaton and Chenault, in approving the proposed state operating budget bill. The bill subsequently was amended and passed by the Senate. It is now in conference committee.

Wagoner predicted some problems.

"The governor has stated he may look at vetoing part of the education budget," he said. "I'm not sure he would do that."

Murkowski has said he might veto some of the $80 million in added education funding state lawmakers have proposed unless the Legislature passes new taxes or agrees to tap earnings of the permanent fund.

Wagoner, though he voted against it, noted the Senate passed a tobacco tax that would increase the tax on a pack of cigarettes and result in $35 million in new revenue. The measure currently is in the House. (Wagoner oppose the tobacco tax because, he said, if taxes are to be used at all, they should be more broadly spread across the Alaska populace.)

But Wagoner finds the basis for the governor's demand for a quid pro quo revenue for spending unreasonable considering the current and expected level of oil prices. He also said he doesn't expect the Legislature would need to tap the Constitutional Budget Reserve account anywhere near the $400 million the governor has previously stated he would set as a ceiling before drawing his veto pen.

Wagoner said a recent prediction out of the Office of Management and Budget showing a $600 million deficit by 2006 could be expected if oil falls to around $22 per barrel.

"But if you look at how it has stabilized between $34 and $36 per barrel, it doesn't look as if it's going to take a dive anytime soon," Wagoner said. "There is not nearly the budget crisis people are being led to believe."

None of the peninsula lawmakers predicted much in the way of capital appropriations. Seaton said the House is looking at bond measures for transportation and harbor projects. Wolf said any capital spending is likely to be light, and Chenault reminded constituents that he told them not to expect much in capital spending when he left for the start of the session.

"That way if you get something, you'd be happy," he said.



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