Bill reroutes some permanent fund money to state operations

Gov. Murkowski says he'll sign bill if it's passed

Posted: Tuesday, May 13, 2003

In future years, eligible Alaskans are likely to see smaller Alaska Permanent Fund dividend checks - but no more than a $20 reduction - under a bill set to pass the Legislature.

Dividends will decrease by less than $1 in 2005 and about $20 by 2012 under House Bill 11, which received preliminary approval by the Senate on Monday. The proposal, authored by Anchorage Republican Rep. Norm Rokeberg, takes 25 percent of mineral lease royalties paid into the permanent fund and sends it to the general fund, which pays for state government.

The proposal has been approved by the House of Representatives. If given final approval by the Senate, the bill will be sent back to the House for concurrence with Senate changes and then on to the governor.

HB 11 is expected to raise about $54.1 million for the 2004 budget year and about $43.3 million annually for the next seven years.

The state constitution mandates that 25 percent of mineral royalties be placed in the permanent fund, but the Legislature increased that amount to 50 percent in 1980, when annual general fund revenues were more than $4 billion.

But that was then and this is now, said Gov. Frank Murkowski.

"I think there's a lot of misunderstanding about that, and I don't know why that's so agonizing and why it's deemed to be some kind of a run on the permanent fund," Murkowski said Monday, noting he would sign the bill if it reaches his desk. "All it does is go back to the original legislative intent, which was 25 percent shall be deposited, and when we had good years we increased it to 50 percent, which was fine. But now we're not having those good years, so we're taking it back to what the original legislative intent was."

A looming budget deficit is expected to drain the state's $1.93 billion Constitutional Budget Reserve - an account used to balance the state budget - by 2005 or 2006. And Rokeberg, like Murkowski, says the royalties should be used to cushion the fall.

An amendment to the bill by Sen. Robin Taylor, a Wrangell Republican, that was passed Monday in the Senate sends the percent back to 50 percent if individual dividends are reduced by more than $20.

"Should that occur, then literally this law will be repealed," Taylor said.

Senate Minority Leader Johnny Ellis, an Anchorage Democrat, opposed the bill on the grounds that other revenue measures should be pursued before turning to the permanent fund.

He noted the proposal is not part of a long-range fiscal plan.

"A piecemeal approach in which we can't assess relative fairness and relative impacts on the state and on our people doesn't seem the way to go," he said.

Ellis also said any significant changes to the permanent fund should go to a vote of the people.

The Senate voted 11-9 in favor of the measure, with all but one Republican, Sen. Scott Ogan of Palmer, in favor.

Also voting against the bill were Democratic Sens. Kim Elton of Juneau, Lyman Hoffman of Bethel, Georgianna Lincoln of Rampart, Donny Olson of Golovin and Ellis, Bettye Davis, Hollis French and Gretchen Guess of Anchorage. Voting in favor of the bill were Republican Sens. Taylor, Fred Dyson of Eagle River, Lyda Green of Wasilla, Ralph Seekins and Gary Wilken of Fairbanks, Gary Stevens of Kodiak, Gene Therriault of North Pole, Thomas Wagoner of Kodiak, and Ben Stevens, Con Bunde, and John Cowdery of Anchorage.

Timothy Inklebarger can be reached at

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