by Gov. Frank Murkowski
February 28, 2004
Let me emphasize that we are talking about using the earnings of the fund, not the principal. We will still have an increasing, $28 billion Permanent Fund in 2011 -- assuming a stable financial market.
We have received many encouraging compliments for having brought the 55 Alaskans together to debate the questions surrounding use of the earnings from the Permanent Fund to maintain essential public services. The conference recognized that it is inconsistent to continue to grow the $28 billion Permanent Fund while our public schools and other essential services deteriorate. The conference recognized that the time has come to resolve this issue, and I believe it should be resolved during this legislative session.
In announcing the conference in my State of the State address, we anticipated a special session of the Legislature, starting March 1.
However, in working out details with the legislative leaders to accommodate their schedules, it became apparent that March 15 would be a better time. The legislative leadership has assured me that they will take up the issues by March 15 and bring them to conclusion by the end of March. We did not have this assurance from the leadership if they had gone into a special session.
I am optimistic we will be able to work with legislators to craft legislation that 1. is acceptable to two-thirds majorities in the House and Senate; 2. will be acceptable to the voters in November; and 3. works, achieving our objective. We all have the obligation to resolve this problem.
Because we are not going to have a special session, we do not need to introduce legislation on each of the recommendations from the conference. Here are the reasons why:
On the first question regarding the percent of market value mechanism for managing the Permanent Fund, legislation has already been introduced and is making good progress in both the House and Senate. Hearings were also held this summer and fall. There is no need to duplicate this. This would not have been the case with a special session, which requires new bills to be introduced.
On the second question, regarding the use of a portion of the earnings of the Permanent Fund for essential state services, the conference indicated a general direction. The conferees said, "yes," some portion should be used, but only after payment of a dividend, and that the governor and Legislature should consider broad-based taxes to help balance the state's income and expenditures. They did not indicate how much of the Permanent Fund earnings should be used for specifically designated public services. I have opted to work with legislative leaders to craft legislation that meets this general objective.
The same situation exists with the third question concerning placing the dividend into the constitution. The conference recommended inclusion but did not indicate the split between the dividend and other public services. This important detail will have to be worked out with the Legislature.
On the question of keeping a minimum balance in the constitutional budget reserve, the conference said we should keep a "prudent" balance in the CBR. We think $1 billion would be appropriate. This does not require legislation. It could be asserted simply by establishing an administrative policy, or it could be spelled out in statute.
All Alaskans appreciate the work that was done by the conferees and the impetus the conference has provided to move these issues forward.
We will work with the Legislature to resolve these issues this year. It is my job as governor to solve the major problems facing the state, not to postpone them or pass them on to another legislative session.
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