Sponsor Statement for SJR 18

Let the People Guard the Permanent Fund

Senator Lyda Green (R-Mat-Su) introduced SJR 18 on the twentieth anniversary of the first contribution to the principal of the Permanent Fund on February 26.

Senator Green appreciates the co-sponsorship of SJR 18 by Senators Loren Leman and Rick Halford.

SJR 18 is a straightforward resolution.

Let the people guard their Permanent Fund. These resolutions ask for only one change to the existing Permanent Fund system -- that the people vote to accept or reject changes proposed for using the earnings of the Permanent Fund.

It is appropriate we introduce these measures today as Alaska celebrates the 20th Anniversary of the first deposit of dedicated oil revenues in the Permanent Fund which took place on February 26, 1977.

Most Alaska citizens do not know that under current law, their dividend program could be eliminated by a simple majority vote of the Legislature and approval by the Governor. Through this legislation, we are placing the future of the Permanent Fund in the hands of the people, not government.

If adopted, this amendment will permanently protect dividends, guarantee inflation proofing, and require voter approval for spending undistributed income from the Permanent Fund earnings reserve.

Under the constitution (Art IX, Sec 15) all net income from the Permanent Fund is deposited in the general fund and available for appropriation. However, the Legislature by statute, has created an earnings reserve account to hold this net income from which dividends and inflation-proofing are paid. Whatever funds are leftover in the earnings reserve after inflation-proofing and paying dividends are called "undistributed income".

By permanently protecting dividends and inflation-proofing, and requiring approval for spending surplus income, it is possible that Alaskans might be more comfortable about considering other uses for undistributed income in the earnings reserve account that will benefit our state. However, there is no requirement for a vote for direct deposits from the earnings reserve account to the principal of the permanent fund.

Although the administration has been silent up to this point, the Governor announced in both his State of the State and State of the Budget addresses that there would be no threat to the dividend and no spending without a vote of the people. That is precisely what this amendment seeks to ensure.

There have been numerous attempts over the years to amend statute and threaten the growth of dividends. From all accounts the public has always reacted negatively to these attempted "raids". Why not ease the fears of the people of Alaska and eliminate a legislative threat to the dividends? These resolutions will lay to rest any question that dividends are in danger, that inflation-proofing might be sacrificed, or that spending of the earnings of the permanent fund might happen without a vote of the people.