House committee approves permanent fund bill

Posted: Thursday, May 08, 2003

JUNEAU (AP) The House Judiciary Committee approved a resolution Wednesday to put a constitutional amendment before voters that changes the way permanent fund payouts are calculated.

House Joint Resolution 26 calls for an annual payout of 5 percent of the Alaska Permanent Fund's market value. The Legislature could spend that money for dividends, state government or a combination of the two.

While the Legislature has never spent Permanent Fund revenues for state government, that issue is being considered this year as lawmakers face a growing budget deficit and declining oil revenues.

Another bill, House Bill 298, would direct 60 percent of the permanent fund money available for payout to the state's general fund and 40 percent to dividends. That bill is sponsored by the House Ways and Means Committee.

The House Judiciary Committee debated the issue of whether to use permanent fund earnings for state government on Wednesday in rejecting an amendment by Rep. Les Gara, D-Anchorage, that would guarantee that dividends be paid at current levels.

Minority Democrats this session have demanded long-term protection for permanent fund dividends in exchange for their vote to fund the state's budget out of its reserve account. Republicans who control the Legislature need the support of some Democrats for the three-fourth vote.

Gara proposed adding a provision in the proposed constitutional amendment to guarantee dividends continue at either the 2003 or 2004 level, adjusted for inflation, or be 50 percent of the money available for payout.

The dividend does a very good job of sharing the wealth. It's become something that our economy relies on,'' Gara said.

The amendment was rejected by a vote of 5-1. Voting against it were Reps. Tom Anderson, R-Anchorage; Max Gruenberg, D-Anchorage; Lesil McGuire, R-Anchorage; Dan Ogg, R-Kodiak; and Ralph Samuels, R-Anchorage.

Samuels said the language of the amendment should remain as the Permanent Fund Board of Trustees wrote it and that Gara's amendment muddies the water.''

We are putting politics in place of something that is really an issue of fiscal stability,'' Samuels said. We can decide what we do with the money later.''

The resolution is now scheduled to go to the House Finance Committee. A similar measure is in the Senate Judiciary Committee. It is Senate Joint Resolution 18.

Constitutional amendments must pass both houses by a two-thirds vote. If it passes, voters would have the final say at the general election in November 2004.

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