In a pair of landmark votes Tuesday, the Alaska Legislature agreed to harness the Alaska Permanent Fund to the needs of state government.<\/p>\n
In separate actions, the Alaska House and Alaska Senate approved a compromise version of Senate Bill 26<\/a>, a measure that allows the Legislature to spend up to 5.25 percent of the fund’s average five-year value. That average drops to 5 percent in 2021.<\/p>\n This year, that will amount to $2.7 billion transferred from the Permanent Fund: $1.7 billion to partially offset the state’s $2.4 billion deficit, and $1 billion for the Alaska Permanent Fund Dividend.<\/p>\n Some lawmakers hailed the bill as a grand compromise fulfilling the 40-year vision of former Gov. Jay Hammond, who said<\/a> his vision for the Permanent Fund was to “transform oil wells pumping oil for a finite period into money wells pumping money for infinity.”<\/p>\n “I think we’ve done an incredible amount to close almost 80 percent of Alaska’s budget (deficit) should both bodies agree to the bill,” said Sen. Anna MacKinnon, R-Eagle River and the lead Senate negotiator on the bill.<\/p>\n Others lambasted the measure for failing to adequately protect the dividend and for lacking the binding power to do what its text says it will do.<\/p>\n “I think this is the beginning of the end of the Permanent Fund Dividend,” said Rep. Scott Kawasaki, D-Fairbanks.<\/p>\n In either case, SB 26 now goes to Gov. Bill Walker.<\/p>\n “I will sign it,” he told the Empire after watching from the House gallery as lawmakers approved it.<\/p>\n Tuesday’s actions come after a year of debate within the Legislature over the role of the Permanent Fund, the last remaining savings account after years of budget deficits.<\/p>\n Even before oil prices declined in 2015, the state had been running a deficit. After the plunge, the deficit exploded to more than $3.5 billion per year. The state exhausted the Statutory Budget Reserve, then drew down the Constitutional Budget Reserve.<\/p>\n At the end of this year, the CBR is expected to hold only $2.2 billion — less than the amount needed to balance the deficit.<\/p>\n