(SitNews) Juneau, Alaska - Alaska Senator Bert Stedman (R-Sitka) has rolled out a new plan this year to guard and grow the Alaska Permanent Fund.

“It is time to build a simple new framework for the permanent fund,” said Sen. Stedman. “One that provides a stable and predictable dividend, protects the fund by ring-fencing it, and allows the proven management of the fund to continue. This bill is not intended to be a final solution for state budget deficits; it is intended to protect the permanent fund first and safeguard the dividend for current and future generations.”

SB 21 (2017 version) creates a simple percent of market value structure. The draw would be calculated based on an average of the year-end market value of the permanent fund for the first five of the last six fiscal years. An amount equal to 4.5 percent of the average would then be made available for appropriation.

According to Sen. Stedman's Sponsor Statement, SB 21 would establish a percent of market value (POMV) approach that “guards and grows” the Permanent Fund. It guards the Permanent Fund from legislative appropriations in several ways.

• The 4.5 percent of market value draw is split in half, with a minimum of 2.25 percent dedicated to dividends and 2.25 percent to the general fund.
• The remaining 2.25 percent can be allocated toward increasing the dividend, reinvesting into the fund, or used to pay for public services, depending on the fiscal circumstances of the state.
• This ensures that no more than 2.25 percent can be used for public services. This keeps downward pressure on state spending and the size of government.

Critically, according to the Sponsor Statement, the maximum amount of the draw available to pay for public services would be 2.25%. This “cap” on funding acts as an effective spending limit – it simply limits the money available for appropriation by the legislature. This keeps downward pressure on the operating budget while ring fencing the permanent fund for current and future generations.

Quoting a news release, this new framework will provide certainty in budgeting for an upcoming fiscal year as the draw will be based on actual historic numbers, while allowing the fund to be invested as it is today and to grow for future generations.

During the Senate State Affairs Committee, Dr. Ralph Townsend, Institute of Social and Economic Research, made a brief statement and also answered questions on Alaska's economy. For his testimony, watch the Senate State Affairs Committee Meeting.

Senator Stedman was appointed by Governor Frank Murkowski in November 2003 to the Alaska Senate to represent District A. Stedman now represents District R following redistricting in 2012. District R includes Ketchikan.

On the Web:

02/02/17 -- Listen to the Senate State Affairs Committee Meeting
Download Mp3
http://www.akleg.gov/ftr/2017/20170202/ssta/ssta_1531.mp3

02/02/17 -- Watch the Senate State Affairs Committee Meeting
Download Video part 1
http://www.akleg.gov/video//2017/20170202/ssta/ssta_1530.m4v

SB 21: PERMANENT FUND: INCOME; POMV; DIVIDENDS
http://www.akleg.gov/basis/Bill/Detail/30?Root=SB%20%2021

Sponsor Statement by Sen. Stedman
http://www.akleg.gov/basis/get_documents.asp?session=30&docid=715

SB 21 (2017) Sectional Analysis
http://www.akleg.gov/basis/get_documents.asp?session=30&docid=716

SB 21 Presentation - Revised
http://www.akleg.gov/basis/get_documents.asp?session=30&docid=810

Editing by Mary Kauffman, SitNews

Source of News:

Office of Sen. Bert Stedman
www.akleg.gov

 

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