Democrats demand protection for dividend

Posted: Sunday, May 04, 2003

Democrats say they'll demand long-term protection for the permanent fund dividend in exchange for their votes to fund the coming year's budget.

They also want the Legislature to ensure there's a dividend this year.

Minority Democrats have leverage at the end of each legislative session because the state can't balance its budget without taking money from a state savings accounts - the $1.9 billion constitutional budget reserve. Tapping that fund requires a three-quarters vote.

Democrats said last week they'll use that leverage this year to demand protection for permanent fund dividends. Otherwise, they said, Republicans eventually will spend dividend money to close the state's chronic gap between revenue and spending.

"I want to make sure for me, for my children, there's a dividend 10, 20, 30 years down the road," said Rep. Eric Croft, an Anchorage Democrat.

Croft said long-term protection for the dividend most likely would require a constitutional amendment.

Some Republicans dismissed the proposal as political grandstanding.

Senate Majority Leader Ben Stevens, an Anchorage Republican, said he would not be willing to enshrine the dividend in the constitution because that might mean the state has to shortchange schools some years to pay dividends.

"I don't support putting the dividend above K-12, above public education, public health, public safety and public transportation," Stevens said.

House Speaker Pete Kott, an Eagle River Republican, also opposes the idea. He has said creating the politically sacrosanct dividend was one of Alaska's worst mistakes.

Senate President Gene Therriault, a North Pole Republican, is not opposed to protecting dividends in the constitution. In fact, he has pushed a proposal that would have had that effect.

"I was the one doing the work on it last year," Therriault said.

But he said there are problems with the idea - it might threaten the fund's tax-exempt status, for instance - and there isn't enough time remaining in the session to resolve those issues.

He believes the Democrats are making an unrealistic demand to score political points.

The Alaska Permanent Fund, created to save some of the state's oil wealth, is protected by the state constitution. Earnings from its investments pay dividends to Alaska residents each year, but that payment is not required by the constitution.

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