JUNEAU — New Alaska Gov. Mike Dunleavy has made sweeping changes to the management of state agencies since taking office Dec. 3, but in the first meeting of the Alaska Permanent Fund Board of Trustees since his term began, stability was the word of the day.
“Stability is going to be critical,” said new Department of Revenue Commissioner Bruce Tangeman, who, along with Natural Resources Commissioner Corri Feige, took his seat as a corporation trustee Tuesday in Juneau.
Tuesday was the start of the corporation’s regular quarterly meeting.
Tangeman said that when it comes to the Dunleavy administration and the Permanent Fund Corp., “there’s no grand plan coming out of the gate.”
No one at the corporation, whose headquarters is in Juneau, received resignation requests sent to more than 800 state employees by the new administration, and Executive Director Angela Rodell remains at the helm as she was under the Walker administration. The corporation also was not included in the administrative order issued by the governor last week. That order broadened the powers of the Office of Management and Budget, allowing it to absorb the budgetary machinery within various state agencies.
During his campaign for governor, Dunleavy pledged to “pay Alaskans back the money owed to them after three years of dividend cuts.”
Doing so would cost $3,733 per dividend recipient. Multiplied by the 593,000 recipients mentioned by interim dividend division director Anne Weske in October, the cost is $2.2 billion.
Dunleavy also pledged to use the traditional dividend formula enshrined in state law, then put it into the Alaska Constitution. That formula would result in a dividend of just over $3,000 in 2019, for a total of $1.8 billion.
The $4 billion price tag for Dunleavy’s dividend plan would rise if there are more recipients. In an interview after his election win, the governor said he would look to the Permanent Fund — and specifically the reserve account that contains its investment earnings — to pay for the idea.
That will require spending above and beyond the sustainable plan approved by Alaska legislators last year. According to figures presented Tuesday to the corporation’s board of trustees, the corporation will make $2.93 billion available to lawmakers for appropriation in the next fiscal year, which starts July 1.
Rodell told the Daily News that so far, the corporation has not changed its expectations and is not planning to make more money available.
We “need to see bills and legislation” before changing investments, she said.
Earlier this year, the corporation’s board of trustees renewed their request for Alaska’s elected officials to abide by a “sustainable, rules-based approach” for spending from the Permanent Fund. Trustees have also requested the Legislature continue to provide inflation-proofing payments to the fund.
In 2017, the Fund’s performance suffered when lawmakers briefly considered using the Permanent Fund to balance the state’s deficit and avoid a more politically difficult maneuver to spend money from the Constitutional Budget Reserve. The prospect of needing to come up with billions of dollars for the state treasury caused fund managers to pull money from longer-term investments into more liquid ones, hurting returns.
Chief Investment Officer Marcus Frampton told trustees Tuesday that since lawmakers passed their sustainable-draw plan, the fund has been providing the state treasury with money on an installment basis rather than a lump multibillion-dollar sum at the start of the fiscal year. That allows the Permanent Fund to hold on to investments longer than it might otherwise, increasing earnings.
“If you can keep an extra $100 million in the fund for nine months, it’s worth it,” Board of Trustees chairman Craig Richards said.
The state treasury department has also allowed the Permanent Fund to vary its payments based on the needs of the treasury. When oil prices are higher than expected, it has delayed asking the Fund for money the Legislature appropriated. That allows fund managers to hold on to investments slightly longer.
“If there were huge volatilities in the amounts, that could be really challenging to manage. I think that’s worth Revenue keeping in mind,” Frampton said.