Legislature votes to protect Permanent Fund

photo by Greg Lincoln

by Daniel McDonald

The Alaska Legislature today (May 8th, 2018) took the single most important step to stabilize Alaska’s economy and protect the Permanent Fund for generations.
The Legislature approved Senate Bill 26, which limits the use of the Permanent Fund’s earnings and ensures Alaskans continue to benefit from a healthy dividend program.
“Today, legislators from across the political spectrum came together for a historic vote to protect Alaska’s Permanent Fund,” said Sen. Anna MacKinnon (R-Eagle River), co-chair of the Senate Finance Committee. “This bill stabilizes our revenue stream, providing reliable funding for Alaskans who rely every day on state troopers, educators and heath care providers.”
The bill adopts an endowment management approach that limits the amount of money legislators may withdraw each year from the Permanent Fund Earnings Reserve Account and keeps the original dividend formula intact. A structured annual draw will give the Alaska Permanent Fund Corporation the stability it needs to make prudent investment decisions necessary to grow the fund and maintain a healthy dividend program.
“Failure to act would have jeopardized the survival of the dividend,” said Sen. Lyman Hoffman (D-Bethel), co-chair of the Senate Finance Committee. “This bill establishes a responsible draw from the earnings reserve to preserve the dividend program, while helping fill our budget gap during these difficult fiscal times.”
Specifically, the bill:
• Limits, for three years, the annual draw from the Permanent Fund to 5.25 percent of the fund’s market value for five of the last six fiscal years (effectively 4.35 percent this year), a draw rate the Permanent Fund Corporation has testified is sustainable. After three years, the draw decreases to 5 percent;
• Removes the statutory split and annual dividend amount in previous versions of SB 26; and
• Maintains the statutory dividend calculation in existing law.
SB 26 passed the Senate by a vote of 13 to 6 and the House 23 to 17, for a combined vote of 39 to 20. The bill now goes to the governor’s desk to be signed into law.
Daniel McDonald is the Senate Majority Press Secretary.