House poised to take tough permanent fund vote

Posted: Wednesday, April 28, 2004

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For the House's discussion of the measure that would spend revenue from the Alaska Permanent Fund to cover state expenses, go to

The House was poised late Tuesday night to take up a measure to spend millions from the Alaska Permanent Fund to fix the state's chronic budget shortfalls.

The measure would for the first time in state history make more than $600 million available to balance state spending while still providing a diminished dividend to eligible Alaskans.

The House had not started debate by the Empire's deadline Tuesday.

Gov. Frank Murkowski is gambling on voters ratifying the move this fall and allowing the state to finally balance its books.

A bipartisan group of House lawmakers on Monday narrowly approved putting the "percent of market value" constitutional amendment before voters in November to change the way the $27.9 billion permanent fund is calculated.

But even before voters weigh in, lawmakers are split on how best to divvy up the $1.3 billion that would be available.

"I think a lot of people are twisted around the axle on this for a lot of different reasons," said Rep. Bruce Weyhrauch, R-Juneau.

House Bill 298 would split it 50-50 between government and dividends, causing dividends to decline by an estimated $360 within three years.

Some lawmakers want to increase the share of money dedicated for dividends - more like a 70-30 split - and look elsewhere for more state revenue. This proposal would take little or no bite out of dividends.

Others see the debate as an opportunity to create a community dividend program to replace the $22 million in municipal revenue sharing and Safe Communities grants that ended last year with Murkowski's budget-cutting vetoes.

"It's all in the percentages," said Rep. Sharon Cissna, D-Anchorage. "I think we need a big discussion on that."

Cissna joined five other Democrats to give the House GOP majority the two-thirds vote it needed to send the constitutional amendment to the Senate.

But on Tuesday, she said she likes the idea of a community dividend but remains undecided whether she would support the bill to divide the money.

House Speaker Pete Kott, R-Eagle River, said he appealed to Democrats late Monday night to support the spending bill. It appeared early Tuesday that not all Republicans who voted for the POMV constitutional amendment would support the spending bill.

"I think those who voted for POMV understood that this was to come next," Kott said. But, "we've got no commitment from them."

Murkowski wants lawmakers to act this session to put before voters the POMV constitutional amendment along with a spending cap that he says collectively would finally balance state spending.

Alaska has relied on this $2 billion reserve to balance its budget in 11 of the last 13 years. The state Department of Revenue expects the state to face a $290 million deficit next year due in part to dwindling oil production.

But the permanent fund measures could have political ramifications for lawmakers - all of whom are in a re-election year - because it would be the first time they tapped the fund for state government since it was created in 1976.

Murkowski administration officials say Alaskans would support such a move and it must happen this year.

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