Governor changes to his Permanent Fund proposals to broaden support

In an effort to add energy to his flagship proposals for the legislative session, Gov. Mike Dunleavy introduced changes to his Permanent Fund legislation Wednesday.

The governor has proposed placing the Permanent Fund Dividend into the state Constitution and including with that a 50-50 split of Permanent Fund earnings between the annual dividend and an appropriation to help support the state budget.

The governor’s proposals made earlier this year have not progressed far in the Legislature. His new ideas are aimed at broadening support in the hope of securing passage before the Legislature’s adjournment next week, on May 19.

Dunleavy also proposing putting the Power Cost Equalization Fund, an approximate $1 billion fund that supports residential electricity service in rural communities, into the principle of the Permanent Fund, so it cannot be spent.

Earnings from the PCE fund, if it were in the corpus of the Fund, can still be appropriated by the Legislature to support rural electric service, but the $1 billion would be protected from “raids” by politicians, the governor said.

The proposal to put the dividend into the Constitution was made earlier by Dunleavy but the 50-50 split of the Fund earnings paid annual to the state General Fund was to be done by state statute rather than being in the Constitution.

“The amendment will give confidence to Alaskans that they will receive their annual 50 percent share of the state’s financial wealth,” Dunleavy said Thursday in a statement.

Amendments to the Constitution require a vote of the people during state general election, the next one in 2022.

The PFD is now provided for in state statute, which can be changed by the Legislature. Putting it into the Constitution would make extremely difficult to change, requiring another public vote.

Putting the Power Cost Equalization Fund into the Constitution is a new idea that has not been made before. It was likely added to the plan to get support for the package from influential rural legislators.

Likewise, the transfer of $3 billion from the Permanent Fund’s earnings reserve account to the principle of the Fund, which would be done by appropriation, is a move that could be supported by other legislators.

“My administration has put forth three constitutional amendments that aim to create an economically healthy future for Alaskans by removing the politicized uncertainty they face year after year. Senate Joint Resolution 6, with a vote of the people, will protect the permanent fund well into the future,” Dunleavy said. “A number of legislators are supportive of this concept and we are positive the passage of SJR 6 will resolve the long-standing dispute over the permanent fund and the PFD, and further protect the power cost equalization endowment within the permanent fund itself. A resolution to these long-standing issues will undoubtedly go a long way to putting Alaska on a strong fiscal foundation,” the governor said.

The governor has introduced two other constitutional amendments this session to solve the state’s budget deficit. One amendment sets an appropriation limit for state spending, the other amendment would prohibit the establishment of a state tax without voter approval.