Walker’s Permanent Fund plan gets first Senate hearing

JUNEAU (AP) — The chairman of the Senate State Affairs Committee said Jan. 26 that he wants to vet several ideas surrounding the use of Alaska Permanent Fund earnings. Sen. Bill Stoltze, R-Chugiak, said that could include a constitutional amendment to allow voters to weigh in on the matter. So far, such a measure has not been introduced. Stoltze said he wants to be able to have different bills and ideas ready to send to the Senate Finance Committee for additional review. Stoltze’s committee held its first hearing Jan. 26 on Gov. Bill Walker’s plan to use the Permanent Fund as an endowment of sorts, fed by oil tax revenue and a portion of royalties. Earnings from the Fund, bolstered by a transfer from savings, would help pay for state government, moving the state away from budgeting around volatile oil revenue. The plan would change how the annual dividends most Alaskans receive are calculated, basing them on a portion of royalties rather than on the performance of the Fund. This year would be a transitional year for the dividend, and Walker’s budget proposal for the upcoming fiscal year calls for oil-tax revenue and the bulk of royalties to go into the earnings reserve. The use of Permanent Fund earnings is a centerpiece of Walker’s budget plan. But questions have been raised about whether the Fund’s earnings reserve account must be swept into the constitutional budget reserve to repay money that’s been taken out of it. The Department of Law, in a memo to the House Finance co-chairs this week, said it wouldn’t. In recent years, lawmakers have approved taking money from the constitutional budget reserve to help with the state’s pension shortfall and to help balance the budget amid deficits fueled by low oil prices. Under the constitution, if money is taken from the budget reserve, money in the general Fund available to spend at the end of each fiscal year is to be deposited into the budget reserve until it’s repaid. A three-quarter vote of each the House and Senate generally is needed to access the budget reserve. State law defines the earnings reserve as a separate account in the Permanent Fund. But the Legislative Finance Division has argued that putting money other than Permanent Fund earnings into the earnings reserve would change the nature of that account. The Department of Law’s memo, signed by Senior Assistant Attorney General William Milks on behalf of the attorney general, acknowledges that the earnings reserve would no longer be comprised solely of Permanent Fund income and that the account would be used for state government costs rather than restricted to paying dividends. But, the memo states, that doesn’t change the earnings reserve into a Fund within the general Fund. The account has always been available to pay for government even if it hasn’t been used that way, the memo states. Legislative Finance Division Director David Teal said he wanted to have the issue at least discussed. If adopted as proposed by the administration, he said he’s concerned about a potential court challenge. A memo from Legislative Legal Services, requested by Sen. Bill Wielechowski, D-Anchorage, states that the appropriation of non- Permanent Fund income to the earnings reserve, as proposed “poses a novel issue not yet resolved by the Alaska Supreme Court.” Some legislators have indicated they’re interested in looking at some use of Permanent Fund earnings to address the deficit. At least two bills with different approaches than Walker has proposed are pending. Sen. Bert Stedman, R-Sitka, said he thinks lawmakers should consider not inflation proofing the Permanent Fund and using that $900 million. He also wants to change the state’s oil tax credit structure. Laura Achee, a spokeswoman for the Alaska Permanent Fund Corp., said by email that most of the Fund’s assets rise and fall with inflation and are “self-inflation proofing.” The Legislature traditionally also has used Fund income toward inflation-proofing the Fund’s principal.

Alaska Supreme Court upholds local school contribution

The Alaska Supreme Court on Friday upheld as constitutional a state requirement that local school districts help pay for education, reversing a lower court decision. The ruling came in a case filed against the state by the Ketchikan Gateway Borough. In 2014, a state court judge ruled in the borough's favor, finding that a required local contribution for schools is a dedicated fund that violates a constitutional provision that no state tax or license will be earmarked for any special purpose. But the high court, in a decision released Friday, said the required local contribution is not a state tax or license within the meaning of the dedicated funds clause. The opinion, written by Justice Joel Bolger, states that the minutes of the constitutional convention and historical context of those proceedings suggest delegates intended for local communities and the state to share responsibility for local schools. Chief Justice Craig Stowers and Justice Daniel Winfree concurred in the decision but expressed concerns. Winfree wrote that he does not rule out an ultimate conclusion that the required local contribution is unconstitutional, as a dedicated tax or otherwise, and does not join the court's analysis or decision on that point. "In my view the question cannot be answered definitively without a full interpretation and understanding of the Alaska Constitution's public schools clause, which, apparently for strategic reasons, the parties did not confront," he wrote. Winfree wrote that he agreed with the court's analysis in affirming the lower court's secondary decision that the required contribution does not violate the appropriations clause or the governor's veto clause of the Alaska Constitution.

About 7,700 Alaskans have enrolled in expanded Medicaid

A state health department official says that since the state expanded Medicaid to cover more lower-income Alaskans on Sept. 1, about 7,700 people have enrolled. Chris Ashenbrenner is the Medicaid program coordinator for the state health department. The department had estimated that nearly 20,100 newly eligible Alaskans would enroll during the first year of expansion, and Ashenbrenner believes that enrollment is on track for that. She says enrollment in the first half of the year may be more robust because of pent-up demand for health care. She says open enrollment periods through the federally facilitated health insurance marketplace also brings in a lot of new Medicaid applications because the system can make a Medicaid-eligibility determination or refer cases to the state for a determination.  


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