JUNEAU — The Republican-led Alaska Senate majority on Friday proposed a new deficit-reduction bill involving Permanent Fund dividend reductions and provisions to limit government spending.
Senate Bill 70 was referred straight to the Senate Finance Committee — bypassing the State Affairs Committee chaired by Wasilla Republican Sen. Mike Dunleavy.
Dunleavy has held up two other Permanent Fund bills in his committee this week, and he's pushing his own plan for the fund that would keep dividends at recent levels with the help of sharp, unspecified budget cuts.
[Hold on Permanent Fund bills highlights split in Alaska Senate majority]
SB 70 is sponsored by the finance committee, co-chaired by Eagle River Republican Anna MacKinnon and Bethel Democrat Lyman Hoffman.
"This is the solution," said Senate Majority Leader Peter Micciche, R-Soldotna, at a news conference Friday morning. "It tells the world that Alaska has dealt with our fiscal gap, and it opens Alaska back up to investment to pull us out of this recession."
The legislation would annually withdraw 5.25 percent of the $57 billion fund's value each year, with one-fourth of the cash going to dividends and the rest going to help pay for state services. Dividends would be set at $1,000 for each of the first three years, and they'd remain at roughly the same level afterward.
The withdrawal falls to 5 percent after three years. Projections by the Legislature's budget analysts show SB 70 reducing the deficit to $900 million next year, from its current level of $3 billion.
The legislation also includes a spending limit that would cap the state's unrestricted general fund budget at $4.1 billion — roughly its current size — and allow it to grow only with inflation. The spending cap would be a state law, not a strict constitutional limit, meaning that it could be disregarded in the Legislature's annual budget process.
Another provision in SB 70 is designed to cut down on the amount of money spent from the Permanent Fund when the state is receiving more oil income. The legislation uses each dollar in oil and gas revenue above $1.2 billion to reduce the withdrawal from the Permanent Fund.