Since Tuesday the Senate State Affairs Committee has been reviewing Senate Bill 128, and will formally be collecting testimony and public comment later today.
The bill was submitted to the Senate by Gov. Bill Walker last month under the authority granted him by the Alaska Constitution. Addressing the state’s $3.5 billion budget deficit, it proposes a new financial model that the governor’s office says would stabilize funding for state services while also protecting the permanent fund.
To that end, additional resource revenues would be directed to the permanent fund and its earnings reserve account (ERA). A sustainable draw from the ERA to the general fund would be used to support state programs, while permanent fund dividend (PFD) payments would be recalculated based on Alaska’s receipt of natural resource royalties.
The state’s revenue resources would be periodically subject to review by the Commissioner of Revenue, whose office would confer with the Alaska Permanent Fund Corporation to recommend adjustments to the ERA draw. The bill also provides for inflationary adjustments to the draw beginning FY20, aimed at allowing the account to generate predictable, stable revenues for the state.
The bill would require 49.5 percent of resource
royalties would be deposited into the permanent fund principal, rather than the current 30 percent.
The deposit would be contingent on whether the ERA had reached a target balance necessary to provide for the sustainable draw of $3.3 billion each year.
If the target is not met, 24.5 percent of those resource royalties would go to the ERA, with another half-percent going toward the school fund. The bill also would appropriate up to 100 percent of oil and gas production taxes to the permanent fund or its ERA, while the annual transfer of funds from that account to the dividend fund would be equal to 50 percent of the resource royalties received by the state.
How well the bill meshes with the state’s
constitution and whether legislators will be amenable to its proposals will be explored during the
committee’s review. But of the bill’s effects, perhaps of the greatest interest to individual residents will be the proposed change to PFD payments.
Since 1982, the dividend has been an annual payment made to enrolled state residents, derived from revenues earned by the Permanent Fund, which last year stood at around $51 billion. The annual PFD payout last year was $2,072 per individual, and since its inception the program has distributed more than $23 billion to state residents.
Under the proposed legislation, PFD payments would be set at $1,000 per eligible Alaskan starting with the 2016 calendar year. Annual dividend payouts would still occur the first Thursday in October and the third Thursday of every month thereafter. If passed, the act would take effect on July 1.
An analysis of the bill by the Department
of Revenue estimates between 640,000 and 647,000 applicants will be eligible for payment for the
2016 dividend. Along with prior-year liabilities and other appropriations, roughly $695 million would
need to be made available under the bill’s $1,000 PFD cap.
The Senate hearing will be held this evening at 5:30 p.m. Locally, comments and testimony can be provided at the Wrangell Legislative Information Office upstairs in the Kadin Building. Proceedings will be viewable at the office, and participants can listen in or offer their thoughts via teleconference. Written testimony can be sent in to senate.state.affairs@akleg.gov or faxed to 465-4928. A draft of the bill is available on the Legislature’s website, at http://www.legis.state.ak.us/PDF/29/Bills/SB0128A.PDF.
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