Governor touts fund use

MAT-SU -- Gov. Frank Murkowski was in Mat-Su last week when he received word the House had narrowly passed House Bill 298, a bill that sets provisions for using the earnings of the permanent fund.

Murkowski said he was happy the bill had passed, but expects a harder battle for its passage through the Senate.

"I'm going to need some help with the Senate -- we just barely got it through the House," Murkowski said Wednesday.

Some senators, he said, have expressed concern that if Alaska voters are given a chance to vote on whether or not to use a percent-of-market-value calculation to use the permanent fund, they may vote it down, and the vote will be seen as a statement that the interest earnings of the fund should not be used. Murkowski said he sees little sense in the argument, as the Legislature can currently spend the interest earnings of the fund but doesn't, because of political pressure not to do so.

"We're just asking them to put this on the ballot for November -- it shouldn't be a hard issue," Murkowski said. "It would be irresponsible to put it off till next year, because we can't do it next year. It's an election year."

Some legislators have said there are other ways to approach the fiscal problem -- such as continuing to make cuts and find efficiencies. Murkowski said that solution has been used too often, and continuing to avoid a fiscal plan may hurt the state in the long run. The state currently has a strong bond rating, Murkowski said, but the state's bonding agency has said the rating comes with a caveat.

"They said not to come back until we have a fiscal plan in place," Murkowski said, adding that several bond requests have been made for funds this year. "It's important for the state to maintain that bond rating, and I'm helbent to maintain it."

Murkowski said he sees the fiscal plan created through HB 298 and House Joint Resolution 26 as the state's best option for fiscal management. HJR 26 would allow voters to decide whether or not to amend the state constitution to allow permanent fund earnings to be used as an endowment. According to information from the House Majority, POMV would take a percentage of the permanent fund's market value, often 5 percent, and use it to close the fiscal gap and provide stability to the permanent fund dividend. Under existing law, the permanent fund dividend check is based on the earnings of the fund. HB 298 addresses exactly how the earnings would be spent. Of the 5 percent of market value, 50 percent would go to annual dividend checks, consistent with current statute; 45 percent would go to fund education and 5 percent would go into revenue sharing, to support communities and municipalities. It would also guarantee dividends of at least $1,111.11 yearly.

If the Senate passes the two bills and the constitutional amendment is subsequently passed by voters, Murkowski said the plan would go in place immediately. The state has a revenue shortfall of about $700 million, Murkowski said, and using the permanent fund earnings as set out in the percent-of-market-value proposal, would generate nearly that amount.

"We'd be short about $120 million if it passes, between what the budget proposes and what the revenue will be," Murkowski said. "With a cigarette tax and a transient tax, we'd have it -- a balanced budget."

Murkowski said he has warned the Legislature that he expects something to be done to resolve the fiscal gap this year.

"Now is the time to do it, when we have the ability to be a little more sensible and we're not looking down the barrel at draconian cuts," Murkowski said. "[I told them] if we don't get it done, we'll stay after school, and you can figure out what that means."

Contact Rindi White at rindi.white@frontiersman.com.