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House votes to create capital income fund
from earnings of the Amerada Hess account


May 01, 2005

Juneau, Alaska - Voting largely along party lines, the House voted Thursday to spend $60 million of Permanent Fund earnings on unspecified capital projects. Gov. Frank Murkowski and Republicans in both the House and Senate claim that since the money cannot be used to pay dividends, it's okay to spend it, say House Democrats.

The House voted 22-17 to approve HB187, which creates a capital income fund from earnings of the Amerada Hess account. On the same day the Senate State Affairs sent SB121 and SB122 to the Senate Finance Committee, their last committee of referral before a floor vote.

"The House took a positive step toward delivering to Alaska a responsible capital budget that finally utilizes earnings from the Amerada Hess account for the betterment of Alaska," Governor Frank H. Murkowski said. "This action continues the positive momentum that will lead Alaska to a responsive capital budget."

"We have $50-a-barrel oil, a $500 million surplus and a $2.2 million Constitutional Budget Reserve," said Rep. Ethan Berkowitz, the House Democratic leader. "There is no reason to go into the Permanent Fund.

The money was paid to the Permanent Fund under a settlement of a lawsuit between the state and North Slope oil producers. The so-called Amerada-Hess earnings are not calculated in the amount available for dividends because the legislature acted in haste to moot claims by the companies that judges in the case would be affected by the possibility of higher dividends.

"This is proof that the dividend protects the Permanent Fund," said Rep. Eric Croft, D-Anchorage. "They found a little piece of it outside the dividends, outside the castle, if you will, and now it's gone."

Governor Murkowski proposed using earnings from the $424 million in oil royalty settlements that sit in the Amerada Hess account. The account is named after one of the parties to the royalty litigation that ended in 1995. The account is managed by the Alaska Permanent Fund Corp., but its earnings are not considered when calculating dividends.

Since unveiling the plan, Governor Murkowski has received letters of support from numerous groups and local governments around Alaska that all support putting the fund to work for Alaska. "We need to improve our schools, we need to relieve congestion on many of our roadways and we need to prepare for the time when Alaska is drilling in ANWR and finally shipping its natural gas to markets. This Amerada Hess proposal begins our work for tomorrow's infrastructure needs now."

The governor thanked legislators and said he looks forward to continuing to work together with lawmakers to craft a final capital budget.

Voting to spend the Permanent Fund earnings were Republicans Anderson, Coghill, Elkins, Gatto, Harris, Hawker, Holm, Kott, LeDoux, Lynn, McGuire, Meyer, Olson, Ramras, Rokeberg, Samuels, Seaton, Thomas, Weyhrauch and Wilson, and Democrats Foster and Moses.

Voting against spending the earnings were Democrats Berkowitz, Crawford, Croft, Gara, Gardner, Gruenberg, Guttenberg, Joule, Kapsner, Kerttula and Salmon, and Republicans Dahlstrom, Kelly, Kohring and Neuman.

Excused from the vote were Republicans Chenault and Stoltze and Democrat Cissna. In a preliminary vote on Thursday, Chenault had voted for the bill. Cissna against it.


Source of News:

Alaska Democrats
Web Site

Office of the Governor
Web Site


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