Hammond shakes up conference agenda with his proposal for state's fiscal woes

Posted: Wednesday, February 11, 2004

FAIRBANKS - It didn't take long for delegates to the Conference of Alaskans to stray from the agenda set by Gov. Frank Murkowski.

At the conclusion of an introductory work session Tuesday morning at the gathering to discuss the future of the Alaska Permanent Fund, delegate Bob Weinstein, the mayor of Ketchikan, asked if delegates would hear from former Gov. Jay Hammond.

Hammond is advocating a plan for distributing permanent fund earnings in the form of higher dividends, then recapturing part of that for state spending with an income tax.

That was not on the original agenda for the Conference of Alaskans, 55 invited residents charged by the governor with answering four permanent fund questions, including whether some earnings should be used to pay for essential state services.

The Alaska Permanent Fund is the state's oil investment account from which residents receive an annual dividend. Last year's dividend was just over $1,100.

Weinstein wanted to hear Hammond's plan.

"I think he should have the opportunity to present that to the conference, if that's what he desires, and the delegates should discuss that and other information that is presented," Weinstein said.

Brian Rogers, who's running the conference as facilitator, said he polled the seven delegates directly appointed by Murkowski and they agreed to make time for Hammond. The former governor originally was to be out of state for the conference and likely would have been asked to make a presentation if it had been known he was available, Rogers said.

"There was some pretty strong concern among the breakout groups that that needed to happen," said delegate Dennis McMillian of Anchorage. Hammond has been so closely associated with the permanent fund, not listening to him would have created a bigger problem, McMillian said.

Hammond will make a presentation at noon today, Rogers said.

Delegates and observers were calling the ex-governor's ideas the "Hammond Plan." Hammond preferred to call it the "People's Plan" and said many other names should be attached, ranging - politically - from former Sen. Rick Halford, a Republican from Chugiak, to Jim Sykes, a Green Party U.S. Senate candidate from Anchorage.

Most recently, Hammond said, he has been talking to Democrats in the Legislature about the idea, and House Majority Leader Ethan Berkowitz, a Anchorage Democrat, said it would be introduced as legislation this week even though he has not embraced all the details.

"Everything needs to be on the table," said Berkowitz, who is attending the conference as a nonvoting delegate.

Hammond said all legislators should get behind the idea.

"Once they see the potential on this, they should flock aboard," Hammond said.

Under the plan, the permanent fund would be converted to an endowment with up to 5 percent of the market value paid out annually. The payout would be distributed as larger dividends.

Subject to voter approval, Alaska would adopt a personal income tax. The amount of tax would be capped at the level of one dividend for individual filers and two dividends for married couples filing jointly.

Nonresidents ineligible to collect a dividend would have their tax liability capped at the same level. The income tax would be suspended whenever the balance in the Constitutional Budget Reserve exceeded $1 billion.

What is POMV?

A formula that uses a percent of a fund's total market value to determine the size of annual payouts while protecting against inflation.

How does it work?

Average inflation 3% a year

Expected real return 5% a year

Total 8% a year

Even with annual payout of up to 5 percent, the fund still holds 3 percent of each year's growth, which provides for built-in inflation proofing.

SOURCE: Alaska Permanent Fund Corp.

Trending this week:


© 2018. All Rights Reserved.  | Contact Us