The Senate and House Conference Committee today is considering a new version of Senate Bill 26 that is a potential compromise to resolving the state’s fiscal problems.
The draft is the result of ongoing negotiations between the House and the Senate to bridge differences in their versions of SB 26, which creates an endowment model for the Permanent Fund, and a structured draw that will cover 80 percent of the State’s current deficit.
The draft limits the amount of money the Legislature may withdraw from the Permanent Fund’s Earnings Reserve Account each year.
“The structured draw in the bill will support the Alaska Permanent Fund Corporation in making prudent investment decisions, providing the necessary tools to maintain a healthy fund and dividend program. The draft does not address how the money will be spent and does not change existing law governing the dividend,” according to a statement from the Senate Majority Press Office.
The conference committee draft:
- Limits, for three years, an annual draw the Permanent Fund Corporation has testified is sustainable – 5.25 percent (effective rate of 4.35 percent in 2019) of the five-year rolling average of Permanent Fund’s value. After three years, the draw decreases to 5 percent;
- Removes the statutory split and annual dividend amount in previous versions of SB 26;
- Maintains the statutory dividend calculation in existing law;
- Conforms statute to a recent Alaska Supreme Court decision.
“Transitioning to a structured, rules-based withdrawal mechanism to allow some Permanent Fund earnings to help support state government and essential services is widely acknowledged to be the single most important action we can take to resolve our state fiscal problems,” said Sen. Anna MacKinnon. “This action alone will solve more than 80 percent of our deficit.”
Rep. Neal Foster commented, “This work draft does not change, in any way, the existing law governing the Permanent Fund dividend. The bill focuses instead on one key change: using an endowment model to protect the Permanent Fund and future dividends.”