Voters would get to decide whether to adopt a new method of managing the Alaska Permanent Fund in the November election under a proposal that passed the state House of Representatives on Monday.
The proposal, known as the percent-of-market-value or POMV method, would require a change in statute and allow 5 percent of the value of the $28 billion fund to be used every year to pay dividends. It would take an additional amendment to use a portion of that 5 percent on state government, as some lawmakers favor.
Gov. Frank Murkowski, who supports using permanent fund earnings for state government, urged House members to let voters decide on fund management.
"I need your help and I know that we all want to achieve what we were sent here for and that's to solve problems, accept responsibility and be held accountable," Murkowski told House members.
The current method of managing the fund is based on a five-year average of the value of the fund's earnings. Proponents of the POMV method argue that it would create a stable and regular dividend payout, and inflation-proof the entire fund.
The endowment proposal still must be approved by a two-thirds majority vote in the state Senate and a popular vote of the people in the November election.
The POMV plan passed on a 27-13 vote Monday night, with Republicans and Democrats voting together on both sides of the issue.
Five percent of the fund would equal about $1.4 billion this year. If split between annual dividend checks and state services, it would provide about $700 million for dividends and $700 million to cover the fiscal gap.
POMV proponents estimate the system would provide a few hundred dollars more in each resident's dividend the first year before dividends leveled off. Fund trustees estimated this year that $605 million was available for dividends.
Murkowski said the decline of the state budget has resulted in less money for schools, utilities and public safety. However, the governor said the money from the permanent fund should be used to help pay for education.
"I want to point out that this idea of using 5 percent of the earnings for dividends and education, including K-12 and the university, is part of a comprehensive plan in addition to additional revenue, which I suggested you review and reflect on," he said.
Murkowski repeated his opposition to a state income tax, saying it would "cost jobs, not create jobs."
Rep. Les Gara, D-Anchorage, said he supports the POMV concept but opposes using the permanent fund for government before discussing other options, such as taxing oil companies.
"It was important for me to not be misperceived because in an ideal world I would like POMV as part of the fiscal plan," Gara said. "Unfortunately, this is a world where House Bill 298 is going to be read across the floor very soon and it's going to then say what happens to the dividend."
He said using the permanent fund inequitably takes the same amount from the poor as it does the wealthy. He called the plan a "one-legged stool."
Rep. Beth Kerttula, D-Juneau, said she opposes going straight to the permanent fund to solve the fiscal gap without a fiscal plan in place.
"I've been really consistent that I just couldn't take my first step as being permanent fund only," she said.
House Speaker Pete Kott, R-Eagle River, said the House will take up the proposal to use the fund for state government today. He said there will be proposed amendments to the bill. One would send 60 percent to dividends and 40 percent to government.
Another amendment would divide it three ways between dividends, state government and municipal governments, Kott said.
Timothy Inklebarger can be reached at firstname.lastname@example.org.
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