NEWS: Smaller Permanent Fund Dividend If Budget Spends From Permanent Fund Earnings Reserve

FOR IMMEDIATE RELEASE:
May 14th, 2015

ANCHORAGE – Today Rep. Les Gara released a report from the Legislature’s non-partisan Legal Research Division.  It shows that if Legislators were to spend from the Permanent Fund’s Earnings Reserve, that would reduce Permanent Fund Dividend payments received by Alaskans.  Some legislators have mentioned this as an option to paying for this coming year’s budget, which is a subject of the current Special Session.

“I’d rather the parties come together and pass a bi-partisan budget, and don’t think spending from the Permanent Fund is the right thing to do.  I think most Alaskans would agree, though periodically some legislators float that as an option for paying for the budget.” said Rep. Les Gara (D-Anch.).

Asked if spending from this part of the Permanent Fund would impact Dividend amounts, legislative attorneys responded, “The brief answer is yes.” 

“I hope everyone can agree that spending from the Permanent Fund should be taken off the table as we work together for a smart, reduced budget this year,” said Gara.  The discussion of Permanent Fund earnings has come up in the context of passing a budget without votes from Democratic and Independent members of the Legislature.  

Much of this special session has involved discussion of which group of legislators wish to cut more from the budget.  The truth is that all parties agree to roughly $800 million in budget reductions.  “Democratic budget cuts and savings would do more to reduce the state’s deficit, but arguing over that ends up with just argument, and not a funded, bi-partisan budget,” said Gara. 

The House Independent Democratic Caucus has proposed hundreds of millions of dollars of budget savings, and a budget that protects children, schools, and seniors.  “Arguments by some whether Republican or Independent and Democratic member proposals further reduce our deficit aren’t the most useful thing we can do as we try to come together on a budget plan,” said Gara.  Democratic and Independent member budget savings that have been proposed exceed $200 million.  They haven’t been mentioned in some of the overly heated debate, and include:

Oil Company Tax Credit Savings: Capping the payment of oil company tax credits at no more than $450 million this year saves $200 million.  This coming fiscal the state expects to pay $650 million in oil tax credits to oil companies, and Democrats have proposed annually capping this amount of credits which, by law, are subject to legislative approval and appropriation.  These credits come in to the state for payment on a first filed, first paid basis, and by capping them, payments due in April and May of 2016 will only be delayed a few months to the next fiscal year, which begins on July 1.  The Department of Revenue estimates that oil company tax credit payments, if not limited, will cost the state $640 million more than Alaska receives back in Oil Production Taxes.

Medicaid Expansion and Reform: Under the Governor’s bill, HB 148, the state would save $330 million over the next 6 years, or an average of over $50 million per year in state spending, and bring in 4,000 needed jobs.

Moving From the $4.2 million/year New Anchorage Legislative Office Building: The Governor’s Office has offered free space at lower market value rentals in the Atwood Building on 7th Avenue, where the Governor’s Office is now located.

Susitna Dam Savings: We should save roughly $6 million of unobligated funds previously appropriated to the $6 billion Susitna Dam project.  That project is unaffordable, and will not be needed if the Governor’s gasline project moves forward.

Bragaw Road Savings: We should save $17.3 million in unobligated funds previously appropriated to the controversial Bragaw Road Extension project, which local Anchorage Community Councils currently oppose.

Democratic and Independent members have offered other budget cuts as well. 

For more information contact Representative Gara at (907) 269-0106.

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