- Associated Press - Wednesday, June 15, 2016

JUNEAU, Alaska (AP) - Members of an Alaska House committee have expressed uncertainty about legislation that would allow the state to draw from the Alaska Permanent Fund to address its multibillion-dollar deficit.

The House Finance Committee met Tuesday to consider the bill, which was approved by the Senate earlier this month, The Juneau Empire reported (https://bit.ly/1UbB9bj).

The legislation would roughly halve Alaska’s more than $3 billion deficit by drawing 5.25 percent of the Alaska Permanent Fund annually. Under the fund’s current market value, that would mean $1.92 billion from the Permanent Fund’s earnings reserve would go to state government.

Committee members cited concerns from the public in their hesitancy to support the measure, which would reduce annual dividend payments to $1,000.

“From what I can perceive, the public isn’t fully accepting it,” said Rep. Bryce Edgmon, D-Dillingham, who explained that he’s received a “visceral” response to the bill. “It seems to me that we don’t have the consent of the public.”

By cutting the dividend in half over the next three years, the bill would ultimately save about $700 million per year, but Rep. Lance Pruitt, R-Anchorage, questioned where that money should end up.

“We are deciding who to give this $700 million to: Do we give it to the public, or do we give it to those who are associated with the government?” Pruitt said.

Revenue Commissioner Randall Hoffbeck said he understood the lawmakers’ concerns, but he warned them that action on the state budget is needed this year. He said the state is at risk of exhausting the remains of its Constitutional Budget Reserve and would be forced to begin spending from the Permanent Fund earnings reserve, the same account that pays dividends.

“In another two years, (that) would be exhausted. At that time, the projection is Permanent Fund Dividends would go away. That’s in about 2023,” said David Teal, director of the Legislative Finance Division, which assists the Legislature on financial matters.

Several legislators at Tuesday’s hearing asked what would happen if the House opted not to vote on the bill.

“I would expect that we might visit again,” Hoffbeck said, implying that Gov. Bill Walker would call legislators into another special session.

Rep. Steve Thompson, R-Fairbanks and co-chairman of the finance committee, responded, “Calling us back isn’t going to change our constituents’ attitudes or the way we’re going to vote.”

The bill still needs approval from the House committee before heading to the full House for a vote. Walker has indicated he would sign off on the legislation if it reaches his desk in its present form.

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Information from: Juneau (Alaska) Empire, https://www.juneauempire.com


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