The People vs. The Legislature
Part III: The 49 Forward Plan Takes the Permanent Fund Backwards
Alaskans created the Permanent Fund in 1976 to protect citizen wealth from the reach of politicians. Today, the legislature is proposing to change the nature and purpose of our Fund. What Governor Hammond warned against has come true. Alaskans don’t want a constitutional rewrite; we want legislators who place the interests of Alaskans first.
What is the problem?
Modern government appears incapable of adjusting its size and spending to achieve sustainability.
The POMV formula itself is inherently unstable because it budgets based on a percent of total wealth instead of actual “income” earned from that wealth. This puts pressure on our Fund managers to produce returns in every market, every year. But what if we experience a loss, as we have eight times since 2001, even absent inflation?
Prioritizing spending is a legislative prerogative, but also a problem. The legislature appears more intent on expanding public sector “defined benefits” than inflation proofing or funding full dividends—both of which are egalitarian and benefit everyone equally.
What is Senate Joint Resolution 14 (SJR14)
Referred to as the “One Fund” or “The 49 Forward” plan, the resolution outlines the Senate’s plan to collapse the Fund’s two main accounts — the corpus and the Earnings Reserve Account — into one. The resolution also constitutionalizes the “Percent of Market Value” framework (POMV) and caps the annual draw at 5 percent of the Fund’s average market value.
What does the legislature and Fund board claim SJR14 will do?
Fund managers say that the 49 Forward plan will simplify management and eliminate the need for annual inflation-proofing appropriations. But their primary pitch is that SJR14 will make government revenue more predictable, less dependent upon market conditions and oil prices. Fund managers argue that locking a fixed percent draw into the constitution will stabilize our fiscal foundation.
While proponents admit that the ERA is easy to manage in concept, they point to the uncertain timing of transfers and liquidity requirements as added complications.
What does MRAK claim SJR14 will do?
The question is: how does locking in a fixed spending formula that ignores reality (i.e. actual earned income) expose the corpus to erosion of principal if / when called upon to cover deficits derived from deficient income? How does this plan “safeguard” the corpus of the Fund?
In reality, 49 Forward changes the purpose of the Fund. It converts a hands-off savings account to a legislative funding guarantor for a new “endowment” plan. The plan replaces rock-solid protections against a raid on the corpus with squishy, uncertain ones. The plan will weaken our bond rating and eliminate legislative accountability to the people by forcing automatic Fund transfers without a vote. Replacing a “spend what you earn” budget philosophy with “take what you hope to earn even if you don’t earn it”—in perpetuity– is irresponsible.
The main source of fiscal instability is not revenue; it is the legislature’s uncontrolled appetite for spending. The 49 Forward plan trades security of the Fund corpus for easier access to money by the legislature. Consolidating the Fund into one account blurs the line between what money is available for appropriation, and what is off-limits. Unless hard firewalls exist, legislators will plunder the Fund.
The POMV cap of 5% does limit the money grab. However, this is false security because of the real risk that any deficiency will come from the corpus.
Who sponsored this resolution?
The Senate Finance Committee proposed SJR 14 in 2025.
- Co-Chairs: Sen. Bert Stedman; Sen. Lyman Hoffman; Sen. Donny Olson
- Vice Chairs: Sen. Kelly Merrick
- Members: Sen. Mike Cronk; Sen. Jesse Kiehl; Sen. James Kaufman
What is the present situation?
Recent legislatures have all but abandoned inflation proofing; and there is nothing “automatic” about it. Although advocates say the unification plan ensures “automatic inflation proofing,” this is doublespeak for hoping the Fund grows.
Presently, the corpus of the Fund is untouchable. The Earnings Reserve Account (ERA) collects and holds all investment income from which the legislature draws under the Percent of Market Value (POMV) formula. The State now relies on these draws for over half of UGF revenues. The CBR still exists and acts as an emergency fund that requires a ¾ majority to tap.
This structure has served Alaskans well for 25 years. Lawmakers can drain the ERA in a crisis, even tap the CBR, but cannot touch the corpus. Fund managers now separate nonexpendable principal from earnings, thus supporting the firewall. Merge the accounts and this legal firewall vanishes.
Alaska’s anti-dedication clause (Art. IX, §7) applies to all state revenues and acts in tandem with the firewalls to prevent self-executing earmarks. Earnings cannot be automatically dedicated.
What is the legislature’s motive?
The legislature cannot muster the fortitude to reduce spending. They veto initiatives with citizen-wide benefit, such as inflation proofing and a full dividend, yet prioritize “defined benefits” for a select constituency. They prefer to change the Fund from a savings account for future generations to an endowment for government. The concepts of forward funding, of inflation proofing as a constitutionally mandated priority outside the budget, or of retaining higher reserve balances in the CBR, are not favored options because they do not grow budgets automatically.
When market returns are negative or inflation is high, the 49 Forward plan guarantees that the 5% draw is paid, even if it means tapping the corpus. In a strong market, no worries. In down years, future generations pay dearly.
The People’s Fund
The Forward 49 plan reflects a growing divide between the interests of the people and those of our legislature. What happens in Juneau that causes our representatives to crawl into a bucket of worms?
DOGE-like budget discipline is needed but for now, Alaskans should retain our existing three-account structure and inflation proof as the law mandates, even if we have to tap the CBR to do it. Fund managers should seize this moment to act more independently on the people’s behalf—using the constitution as their guide.
Upcoming: Part IV: Ghost Busting: Dispelling the Anti-PFD Phantoms
Thank you Jon for ALERTING US. The closer we get to embracing the original structure of the Hammond Permanent Fund the better for everyone.
Our government in Alaska is corupt. They don’t care to live within our means they wanna spend spend spend spend. I’ll be moving outta here in couple more yrs after I retire from my current job I’m 52 yrs old so will have plenty of other places to move to
If your smart you’ll move too.
Could you define the acronyms? I know you know but some of us don’t or don’t recall cause we are not dealing with these things everyday. I would suggest a glossary of terms and acronyms.
No debate needed, The Alaska legislature’s are crooks and thieves, Everybody knows that
Anything / everything coming out of the “bipartisan” legislative majorities these days is designed for one very simple and specific goal: make it easier for them to get their grimy little paws on the corpus of the Permanent Fund. They already have the PFD spent. They are about to implement defined benefit pensions, reversing 40 years of fiscal discipline which will all but guarantee dipping into to the corpus. Expect the Alaska courts to enforce that conclusion.
Solution? I am starting to like the Mackey Plan a lot, dissolve the entire PF and pay it out. If we can’t trust them, we might as well take their playtoys away. Cheers –
The Alaska Legislature has broken Alaska law 9 years in a row with no valid excuse. They have abused the law. They have failed Alaskans. Stedman is one of the most steadfast lawbreakers.
Exactly right, Manda. Thanks in large part to the Liar Bill Walker. A process exists to change the law. They have chosen not to follow that process, but to, as you said, simply break the law. Sad.
The legislature will not stop until
they have it all, and the corpus, too.
“The legislature cannot muster the fortitude to reduce spending”
Root causation.
Re-elect NO ONE!
They are all liars and cheats!
Prove me wrong! Please!
If a person running more than once in the senate or legislature, is flat out cheat and liar.
The photo and title make it very clear that the author is starting from a position of complete delusion.
Citizens are not shareholders of the Permanent Fund, the Hammond plan was not adopted, and the current plan is just an inadequate UBI set yearly by the folk the PEOPLE elect 🙂
Get a grip. And if you don’t want your roads, your trails, your libraries, clean air, clean water, safe food and drugs, tell your Reps, but don’t be surprised if you find out your neighbor disagrees with you 😉
Since the 1990’s my late brother ” Lazy Mountain Jim ” found funds missing ( not deposited ) into our PFD account ; He would call to get the ( actual ) deposit figure each June and write it down ; The deposits are actually made 5-6 months later ; Once the shortages showed up he questioned the PFD division and was told ” We made Loans ” ; They would not tell him to whom they were made , nor if and when they would ever be paid back ; He then spent ten years on his own dime questioning over half of our State Legislators about these missing funds ; Six promised him answers , never giving any ! By the year 2011 ( June ) , Jim tracked $ 27.3 Billion had been taken in this way ( Prior to actual deposits ) ; I’ve personally seen the video of Jim questioning Lyman Hoffman about this ; In that video Mr. Hoffman had Black hair , it was years ago ; Mr. Hoffman said : ” Mr. Garhart we will get you answers ” ; This was an outright LIE !