Editor's note: Mike Doogan is an Alaska State House Representative, author and former newspaper columnist. This commentary appeared in his legislative e-newsletter on Feb. 3.
I have started to try to get support for my bill to put $10 billion into the Alaska Permanent Fund. The bill is in the Powerful House Finance Committee, of which I am an insignificant member. I haven't asked for a hearing yet; I want all the members of the House to have a chance to think about it first.
The bill has about the same chance to pass as a snowflake in Hades. There are many bills that offer us the chance to spend, spend, spend. Since spending is much more popular than saving -- particularly in an election year -- you can write your own script for poor House Bill 194. It won't have a happy ending. But I'll give you my pitch anyway.
HB 194 is nine lines long. It would move $10 billion from the Constitutional Budget Reserve to the Alaska Permanent Fund.
Can we afford it? Yes. In his presentation to the House Finance Committee last week, the Commissioner of Revenue said that the state will have $19.5 billion in the bank -- minus capital budgets and etc. -- at the end of the coming year.
Would moving the money cause problems? No. At the moment, there is $11-point-something billion in the Constitutional Budget Reserve. Even I can do the math. The Alaska Permanent Fund Corporation says that it can absorb the money, although it might have to hire a few folks to count it and see to its investment.
Will this happen? You tell me. HB 194 was introduced March 16 of last year and sent to the House Finance Committee and is just sitting there. All 12 members of the House minority are sponsors, and I am going from office to office to see if any majority members are willing to sign on.
Why should they?
Because any money that isn't locked away will be spent.
The Permanent Fund was created to keep the state's citizens and politicians from running through the new oil money as fast as the pipeline could produce it. It has many fathers. The first attempt to create it was a bill that passed the legislature in 1976. It was vetoed by then-Gov. Jay Hammond. Led by Rep. Hugh Malone, legislators approved a constitutional amendment that read:
At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for the income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.
The amendment was passed overwhelmingly by the voters. After much to-ing and fro-ing, legislation created the structure of the fund in 1980. Two years later, the dividend program was established. And the rest, as they say, is history.
Unfortunately, not all of that history is peaches and cream. Although legislators made additional deposits in the fund's early years, there has been no voluntary deposit since 1985. Although money managers have made such shrewd investments that its value stands at about $40 billion, that's only enough to put about $2 billion a year into the state's coffers. A nice chunk of change, but nowhere near what it would take to balance the budget. Another $10 billion would be a nice addition.
One more thing. A $10-billion deposit would add about 25 percent to the value of the fund. According to Alaska Permanent Fund Corporation estimates, in 10 years that would raise the dividend from about $2,300 to about $2,800.
So judge for yourselves. I think the answer is clear. It will be interesting to see how many of my fellow legislators see things that way, too.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch. Alaska Dispatch welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.