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Lawmakers Create Path Forward for Permanent Fund

Mar 4, 2020 | Government, Monitor

JUNEAU—Leadership of the House Rules Committee introduced a proposal to settle the longstanding debate over the Permanent Fund and the Dividend Program.

House Bill 306 is anticipated to provide stability for Alaska’s economy and communities while putting an end to the structural deficit built into the state budget. Rules Committee Chair Chuck Kopp and Vice Chair Jennifer Johnston crafted the bill.

The proposal would reinforce the spending cap placed on the Permanent Fund’s earnings, as passed in 2018’s Senate Bill 26, which will preserve the value of the Permanent Fund and allow it to grow. HB 306 sets aside 20 percent of the state’s draw from the Permanent Fund’s earnings to be used to pay dividends, and the remaining 80 percent will be used to fund critical state services.

HB 306 adheres to the rules-based system for fund transfers recommended by the trustees of the Alaska Permanent Fund Corporation and allows for the predictability required for more prudent investment of the fund.

“Private sector and community leaders have been pleading that the state prioritize stability and certainty in our fiscal planning,” said Representative Chuck Kopp of Anchorage. “HB 306 makes clear that we view it to be more important to preserve the health of our economy and communities than allow the dividend to continue to dictate our budget structure.”

“I am proud to be a sponsor of a plan that addresses the tension between dividends and the POMV,” Representative Jennifer Johnston added. “Without a change, we will remain paralyzed with budget uncertainty and future generations will suffer as a result of our inaction.”

The new bill would also establish a mandatory evaluation of the plan’s effectiveness and effects on the Permanent Fund and Dividend Program, to be delivered in 2026.

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