House Bill 300: My Proposal to Combat Alaska's Fiscal Problem
I have introduced a bill aimed at resolving the long-standing issues surrounding the allocation of the Permanent Fund Dividend. HB 300 will ensure the consistent funding of critical state and local operations and provide communities and individuals with both a portion of our state's great wealth for themselves and funds the essential services that we all require to have a bright future in Alaska.
My plan involves dividing the entirety of the current POMV structured draw (5% of the Permanent Fund total) into sections using a prescribed formula. The total draw is projected to be around $3 billion. My bill would allocate 40% of the draw to K-12 education, 10% to the University, 10% to the capital budget, and 10% to a new community dividend. The first two items are currently in the budget and are funded to approximately the percentages listed. This formula would ensure that levels stay consistent and would gradually increase over time to stay in line with inflation. These entities would no longer have to actively lobby the legislature for basic funding. Both of these items are in the constitution. The capital budget percentage of 10% reflects the an increase of approximately 100% from last year. Our capital budget has been at the minimum level for federal matching for the past several years and our infrastructure and workforce are facing the effects. A capital budget of $300 million is not very large historically, but will go a long way towards keeping our workforce employed in Alaska.
One of the designations under this proposal is a 10% ($300 million) distribution to communities. This would replace the existing Community Assistance Program and increase community assistance by about 10-fold from the existing $30 million. The result of this would have many effects. The first is to bring state funds closer to individuals at the community level. Local communities would see a large increase in state funds and citizens could more easily influence how this money is spent. An individual could lobby their community leaders such as the City Council, Mayor, or Village Council with their priorities for how these funds should be spent. Whether it’s a new roof or a school, a new powerhouse for a village, deferred maintenance projects, a homeless shelter, ski trails, swimming pools, or village police officers- the list goes on.
Local community members and local governing bodies know best their own needs and priorities. This new “community dividend” would use a similar formula to the community assistance formula in that it gives a base amount to each borough ($1 million,) city ($250,000,) and unincorporated communities, mostly villages ($87,000,) and uses the remaining balance to be distributed on a per capita basis using the overall state population with a $1200/person cap. The cities of Anchorage, Fairbanks, and Juneau would all get a base of $1 million plus a per person distribution. For example, the Fairbanks Borough would receive a total of $22 million which ends up being approximately $344/person, and the City would get $9.2 million, or $388/person. Villages that get the $87,000 as their base would get approximately the same $300/person, but the smaller their village is, the higher the per capita amount ends up being. For example, the City of Fort Yukon would get $433,000 or the equivalent of $866/person, while the village of Rampart would receive $88,000, which hits the cap of $1200/person.
The last portion of the POMV draw (30% or approximately $900 million) would be split into the PFD and the General Fund disbursements. This would be a 50/50 split which would result in approximately a $700 PFD. This amount combined with the per person amount can add up to close to $2,000 for the smaller communities that are in need of cash for their economies, and close to $1000 per person for the larger cities. This solves some of the problems that just cutting the PFD to pay for state services would cause and ensures that certain critical state services continue to set predictable and necessary funding. I am excited to see the discussions that arise form this proposal.
Constituent Event in Fairbanks
On Saturday March 21, I will be hosting a town hall meeting with Rep. Grier Hopkins, where we will give an update on the budget process and the legislative session so far. I will also be presenting my new PFD bill. More details are forthcoming, but I hope you will consider joining us for our Saturday meeting in Fairbanks.