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By NICK BOWMAN
Daily News Staff Writer
The latest plan to use the Alaska Permanent Fund to help pay for state government — while keeping an annual dividend of more than $1,600 — comes from Sen. Bert Stedman, R-Sitka, and revives former Gov. Frank Murkowski’s percent of market value approach.
Stedman’s bill, Senate Bill 21, shares the same bill number as the More Alaska Production Act pushed by former Gov. Sean Parnell, but has nothing to do with that 2013 legislation.
The new bill would draw 4.5 percent of a rolling average determined by the permanent fund’s market value during the preceding five years. The cash would be drawn from the fund's earnings reserve.
A hard minimum of 2.25 percent would be used for dividends, according to Stedman’s presentation to the Senate State Affairs Committee on Thursday.
In the upcoming fiscal year, that minimum would equal a dividend of approximately $1,700 based on a draw of $1.09 billion, according to the presentation. The other $1.09 billion could be used to fund state government.
Stedman told the Daily News after the committee meeting that the core of his proposal is similar to Murkowski’s percent of market value approach, but his bill implements the idea on a much quicker timeline because of gaping state deficits.
He also noted that it’s a “structure that Sitka has been running for over 20 years in their portfolio, in their permanent fund.”
Stedman’s projections show the dividend and the value of the fund growing steadily through fiscal year 2022, when the dividend would reach $1,910.
While other proposals for the permanent fund — including the most well-known pitch from Gov. Bill Walker — would rely on the fund to cover most of the state’s multibillion-dollar deficit, SB21 would only cover a fourth to a third of the state deficit depending on the current state of oil prices.
“It's paramount that it protects the permanent fund,” Stedman said. “This wasn't driven to generate cash for the general fund (or) to generate a particular dividend.”
The Alaska Legislature would be blocked from appropriating less than 2.25 percent of the withdrawal to dividends, but it could spend more than 2.25 percent for dividends. Depending on the financial condition of the state, lawmakers could take the other half of the draw and use it for dividends, further investment in the permanent fund or use it to cover state spending.
Stedman said he was concerned that once state savings run out, the Legislature would draw too deep from the permanent fund to cover the state’s operating costs.
“Collectively, the 60 of us are very dangerous,” he said of lawmakers. “We all have good intentions, but good intentions go awry on occasion.”
SB21 remains in State Affairs, but will be discussed in both that committee and the Senate Finance Committee in the coming days.