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FAIRBANKS -- Fairbanks Rep. Jim Whitaker has pre-filed a bill that would use income from the permanent fund's earnings reserve to help pay for capital projects.
Whitaker, a Fairbanks Republican, said his one-year proposal also would increase the size of dividend checks next year.
The earnings reserve is money generated by the permanent fund principal that has not been used for dividends or inflation-proofing and has not been deposited back into the principal.
Since the dividend program began, nearly all earnings not used for dividends or inflation proofing have either been deposited back into the principal or left in the reserve account.
Spending earnings from the reserve instead of using it to build up the principal would retard growth of the principal and diminish the size of future dividend checks.
But Whitaker said tapping earnings of the reserve account would provide more money in the capital projects account to pay for state infrastructure.
"We have underfunded our capital needs for the last several years," he said. "The needs are there ... If this isn't the best way to do it, then we need to find a better way."
He said the proposal also would add hundreds of dollars to each permanent fund dividend check mailed to eligible Alaskans next fall.
The legislative session begins in two weeks. The bill has a sunset date of one year.
Whitaker's bill calls for half the investment income collected this year from the permanent fund's earnings reserve account to be added to the dividend payout.
The other half of the income, expected to be about $200 million, would be placed in the state's capital projects fund.
Whitaker's proposal would not touch either the principal of the permanent fund, which is protected by the state Constitution, or the permanent fund earnings themselves.
Rep. John Harris, a Valdez Republican, said Whitaker's proposal sounds like a win-win situation.
"I think Jim has hit upon something that could be very positive for the state," Harris said. "I look forward to working with Jim on the (House) Finance Committee to see where we can go with it."
More money is needed in the capital budget to pay for projects like harbors, roads, schools, airports and state buildings, he said.