- Associated Press - Thursday, April 14, 2016

JUNEAU, Alaska (AP) - Gov. Bill Walker’s administration is generally pleased with a House committee proposal calling for structured annual draws from Alaska Permanent Fund earnings but sees some areas that could be improved, Attorney General Craig Richards said Wednesday.

The House and Senate Finance committees released draft plans Tuesday calling an annual draw from fund earnings equal to 5.25 percent of the average market value of the fund for the first five of the preceding six fiscal years. The plans call for initial fixed dividends of $1,000 and a new calculation for dividends that is based on a portion of the draw and an amount equal to 20 percent of prior year resource royalties.

Richards told House Finance on Wednesday that the administration would like to see a way under the bill to grow the principal of the fund with inflation and to have rules around spending from the draw. The 5.25 percent draw as the bill is currently written also is “a little aggressive,” he said.

In a letter sent to House Finance Committee co-chair Steve Thompson, Richards and Revenue Commissioner Randall Hoffbeck said the Department of Revenue calculates that a draw of about 4.9 percent would be the maximum sustainable amount under the committee plan, which does not direct additional revenue to the fund.

Putting production taxes and royalties into the earnings reserve could increase the sustainable percent-of-market-value draw to 6.5 percent, Richards said. Proposed language for that approach from the administration suggests putting over half of resource royalties into the earnings reserve.

In an interview, Richards said that is one of two options the administration is advocating. The other, he said, would be to reduce the percent-of-market-value draw if oil prices rise.

“We just don’t want to be in a positon where oil prices rebound and we’re spending a bunch of money from the permanent fund that is no longer necessary,” he said.

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