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Last updated
Sept 15, 1999
Election Results
Save Your PFD
Sept 14, 1999
Who is paying
for YES vote
Table Of Contents
Plan Could Mean
In Next 5 Years
The Associated Press
JUNEAU - There's a one-in-four chance that Alaskans aren't going to get a Permanent Fund dividend at some point in the next five years if Gov. Tony Knowles' plan to use fund earnings is approved, a consultant says.
The problem is not that the Permanent Fund will be low in funds but rather a quirk in how dividends are paid, said Gregory C. Allen, executive vice president for Callan Associates Inc.
Knowles has proposed using $4 billion of the fund's earnings to help bridge the annual budget gaps that are draining the state's savings.
Administration officials and legislators have previously said using fund earnings will be necessary. But they stress that they are looking at ways to avoid Al-len's scenario.
"No one is passing a plan into law that is going to run a one-in-four risk of eliminating the dividend," said Larry Persily, special assistant for the state Department of Revenue. "You've got 60 legislators and the governor who are trying to find the best plan to reduce risk and yet provide the same services people are demanding just as loudly as they are demanding their dividend."
At the root of Allen's conjecture is how the fund's income is calculated.
New accounting rules require the income be determined by the current value of holdings. For years fund managers had calculated income from stocks and similar investments after their sale.
The new rule means the fund's income can vary much more each year as stock prices rise and fall.
There are currently $6 billion of earnings available through the fund's earnings reserve, and Knowles wants to use $4 billion for budget purposes. If that happens and the stock market has a bad year or two, the earnings account could technically be in debt because of the lower stock and other asset values.
The earnings account is used to pay dividends and protect the fund from inflation. But if it's in the red, there would be no money for the annual checks Alaskans have come to expect.
Allen delivered his analysis to the permanent fund board earlier this month. He also warned them the increased volatility will make it unlikely the fund can fully in-flation-proof itself if Knowles' transfer occurs.
Lawmakers are considering several plans that rely partly on permanent fund earnings.
Knowles has also said he is open to looking at such approaches.


Fairbanks Daily News-Miner, Monday, March 29, 1999

Supporters of Vote


Elected officials
  • Gov. Jay Hammond
  • Sen. Dave Donely
  • Sen. Lyda Green
  • Sen. Rick Halford
  • Sen. Robin Taylor
  • Sen. Jerry Ward
  • Rep Mary Sattler Kapsner
  • Rep Vic Kohring
  • Rep. Bev Masek
  • Rep Scott Ogan
  • Rep Jerry Sanders
  • Doyle Holmes, Assby.
  • Mayor Sarah Palin
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