Proposals to spend Permanent Fund earnings on the state budget will be a major focus of the legislative session’s final nine days.
Leading lawmakers say the outcome could be a combination of bills proposed by Gov. Bill Walker, Anchorage Republican Sen. Lesil McGuire and Anchorage Republican Rep. Mike Hawker.
McGuire said it appears that majorities in both houses want to make lasting changes, which she says will strengthen the Permanent Fund for the future.
“It is a life-or-death situation that we do not leave the Senate without a plan that puts the state on a path toward closing the fiscal gap,” McGuire said.
McGuire said the state’s economic future depends on bringing certainty to the state budget. While she supports spending cuts, the senator says cutting much deeper would cost jobs and harm needed services.
“What you’re starting to see already is a chilling effect in the marketplace,” she said. “You have Alaskan residents, certainly in my district and other districts, talking about accelerating the sale of their homes, not making business investments in their capital spend.”
The particular elements of the final bill remain unclear. A major decision left still to be made is whether to include Walker’s plan to spend a set amount each year. McGuire and Hawker have instead proposed drawing 4.5 to 5 percent of the fund’s market value annually.
Either way, it will likely mean residents will see smaller Permanent Fund dividend checks in the future. But the governor has said that making no changes would be worse. That’s because the Permanent Fund earnings reserve could be exhausted in a few years, leaving residents with no dividends.
The House Finance Committee is scheduled to discuss Hawker’s bill, House Bill 224, Saturday, while the Senate Finance Committee is scheduled to discuss Walker’s Senate Bill 128. McGuire sponsored Senate Bill 114.
