Permanent Fund contribution to state budget will increase

Permanent Fund contribution to state budget will increase

Alaska’s Permanent Fund will pay $2.93 billion to the state General Fund next year, up from $2.72 billion paid this year, Fund managers said. While that sounds good, in reality it mainly covers built-in cost increases in the budget such as for rising health care and pension costs. The payment, under the new percent-of-market-value payout rule, is now confirmed for Fiscal Year 2020, the state budget year beginning July 1, 2019. This is still important because for the first time legislators will begin the session knowing with certainty the amount of a significant chunk of state revenue. Previously they depended on forecasts of oil revenue, which were uncertain. The Permanent Fund’s long-term projection is for steady increases in the POMV payment due mainly to ongoing growth of the Fund. If income meets the target of 8 percent yearly, its historic average, the POMV payments will reach $3.66 billion in FY 2028, according to the Fund’s projections. Payments are made under a formula set in a new state law that provides 5.5 percent of the Fund’s market value to the General Fund (the amount drops to 5 percent after two years.) The Legislature must decide next spring how much of the $2.93 billion will be used to support public services and how much will be spent on the annual Permanent Fund dividend, or PFD. For the current year, FY 2019, $1 billion of the $2.7 billion POMV payment went to fund the $1,600 2018 PFD and $1.7 billion went to support the state general fund.

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