Senate focuses on Permanent Fund plans to close budget gap

Proposals to spend Permanent Fund earnings on the state budget will be a major focus of the legislative session’s final nine days.

Download Audio

Sen. Lesil McGuire, R-Anchorage, explains Senate Bill 114 to the Senate Finance Committee, March 22, 2016. The bill reflects her vision for how the Permanent Fund and other state financial accounts should be managed. (Photo by Skip Gray/360 North)
Sen. Lesil McGuire, R-Anchorage, believes bills that will use the Permanent Fund o the budget could strengthen the Permanent Fund for the future (Photo by Skip Gray, 360 North)

Leading lawmakers say the outcome could be a combination of bills proposed by Governor Bill Walker, Anchorage Republican Senator Lesil McGuire and Anchorage Republican Representative Mike Hawker.

McGuire said it appears that majorities in both houses want to make lasting changes, which she said will strengthen the Permanent Fund for the future.

“It is a life or death situation that we do not leave the Senate without a plan that puts the state on a path toward closing the fiscal gap,” said McGuire.

McGuire said the state’s economic future depends on bringing certainty to the state budget. While she supports spending cuts, the senator said cutting much deeper would cost jobs and harm needed services.

“What you’re starting to see already is a chilling effect in the marketplace,” McGuire said. “You have Alaskan residents, certainly in my district and other districts, talking about accelerating the sale of their homes, not making business investments in their capital spend.”

The particular elements of the final bill remain unclear. A major decision is whether to include Walker’s plan to spend a set amount each year. McGuire and Hawker have instead proposed drawing 4 and a half to 5 percent of the fund’s market value annually.

Either way, it will likely mean residents will see smaller Permanent Fund checks in the future. But the governor has said that making no changes would be worse. That’s because the Permanent Fund earnings reserve could be exhausted in a few years, leaving residents with no dividends.

Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at

Previous articleSavoonga harvests its second whale of the season
Next articleWrangell-Angoon plane crash leaves 3 dead