A bipartisan group of Republican, Democratic and independent legislators have introduced a constitutional amendment to fully protect the Alaska Permanent Fund in the state constitution.
“Current law allows the Legislature to spend the entire Permanent Fund Earnings Reserve Account by a simple majority vote,” said Rep. Cliff Groh, D-Anchorage. “We need this constitutional amendment to prevent the Legislature from blowing a critical part of the Permanent Fund in a spree.”
The proposed constitutional amendment, introduced as House Joint Resolution 9, would combine the Permanent Fund principal and the Permanent Fund earnings reserve account into a single constitutionally protected account. Under this proposed amendment, the Legislature would be allowed to appropriate each year a maximum of 5% of the market value of that new constitutionally safeguarded account as calculated over the first five of the preceding six fiscal years. Experts have told the Legislature that these limits make that spending rate sustainable under this Percent of Market Value (POMV) system.
The Permanent Fund’s Trustees have recommended this change since 2003. This constitutional amendment was also urged by the Fiscal Policy Working Group, a bipartisan and bicameral group of lawmakers who proposed a comprehensive solution for the state of Alaska’s structural deficit in 2021.
If the resolution proposing the constitutional amendment passes the Legislature and is approved by voters, the change will align the Permanent Fund with best practices in the financial industry. The constitutionally limited POMV draw will serve as a cap on revenues and an effective spending cap, limiting the amount of money that the Legislature can appropriate to no more than 5% of the Permanent Fund’s total market value. The new structure that this constitutional amendment would also automatically build in inflation-proofing of the Permanent Fund without requiring an annual appropriation by the Legislature.
Co-sponsors with Groh of the constitutional amendment are Reps. Jesse Summer, R-Wasilla, Alyse Galvin, I-Anchorage, Calvin Schrage, NP-Anchorage, Stanley Wright, R-Anchorage, Ashley Carrick, D-Fairbanks, Andy Josephson, D-Anchorage, and Jennie Armstrong, D-Anchorage.
If the resolution is approved by two-thirds of the House and the Senate, this constitutional amendment will be placed on the ballot without being subject to a veto by the Governor. If approved by a majority of voters, the amendment becomes part of the Alaska Constitution.