Session: State Capitol, Room 411 Juneau, AK 99801-1182 Toll Free: (877) 465-3004 Phone: (907) 465-3004 Fax: (907) 465-2070 Interim: 119 North Cushman Street, Room 213 Fairbanks, AK 99701-2879 Phone: (907) 452-1088 Fax: (907) 452-1146

Sponsor Statement for HB 17
Capital Projects Fund/Distribution of Permanent Fund Income

An Act relating to the capital projects fund, to distribution of money in the earnings reserve account of the Alaska permanent fund to the capital projects fund and to the dividend fund at the end of fiscal year 2001, and to increasing the amount of permanent fund dividends for calendar year 2001; and providing for an effective date.

Alaska's infrastructure needs are significant, and the economy of the State is not growing, but rather, declining faster than that of any other state in the union. House Bill 17 will improve Alaska's infrastructure through increased capital appropriations and boost Alaska's economy through a direct supplement to the dividend. Further, Article IX Section 16 of the Alaska State Constitution directs that 1/3 of appropriations from the General Fund shall be reserved for capital expenditures. The legislature has never upheld this constitutional requirement, nor has the legislature challenged the Attorney General's opinion, which nullified this constitutional mandate.

HB17 is a first step toward correcting this situation by allocating the realized earnings from the Earnings Reserve Account (approximately $320 million projected fiscal year 2002). A separate fund entitled the "Capital Projects Fund" will be established with 50% of that total, which will pay for infrastructure development throughout Alaska; subject to appropriation, by the legislature. The remaining 50% will be allocated as a "one-time" supplement to the Permanent Fund Dividend payment (approximately $260 per PFD check) or as an amended option, a municipal dividend of an equal amount.

Funds allocated from the Capital Projects Fund will be worth considerably more, given federal matching dollars. A conservative estimate for federal matches raises the amount available for capital projects to $700 million. Also, both the supplement to the dividend, and the municipal dividend have an economic growth multiple factor of 1.75 and 2.5 respectively, thereby increasing the size of the State's economy by more than $400 million. All in all, these actions represent an increase of over $1 billion to our State's economy at a time of significant need.

Alaska has amazing financial resources, $32 billion in cash. No state and few nations have a treasury to compare. Given this financial basis, we should not have a failing economy and a poorly maintained infrastructure. HB17 begins to use our resources to build our state and our economy.

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