Rokeberg bill would change how much oil money goes into Permanent Fund

Legislation would put more money into state general fund to help cover operating budget deficit and make a state income tax on individual Alaskans unnecessary

Bill Kelder

PNA Legislative Reporter

Rep. Norman Rokeberg, R-Anchorage, has introduced a bill that would reduce by half the percentage of oil and gas revenues that go into the state’s Permanent Fund.

Currently, 50 percent of oil and gas revenues the state derives go into the Permanent Fund. Rokeberg’s bill, House Bill 96, would reduce this amount to 25 percent, allowing the remaining 25 percent to go into the state’s General Fund, which is used to fund the day-to-day operations of state government.

“Under the state constitution, we are obliged to put 25 percent of oil and gas revenues into the Permanent Fund,” Rokeberg explained. “But in 1980, when the state’s cash flow from oil and gas production exceeded $4 billion a year, the Legislature approved legislation upping the percentage going into the Permanent Fund to 50 percent. That was fine at that time because the state had enough money coming in that we didn’t have to worry,” Rokeberg said.

“Things have changed now, particularly the state’s finances,” he said, referring to the $1.2 billion deficit in the state’s present operating budget.

“Oil prices have declined, which means revenues to the state have declined. I am not in favor of approving new taxes to cover this, so I introduced HB 96 to limit the percentage of oil and gas revenues going into the Permanent Fund to the level required by our constitution,” Rokeberg said. “If revenues go back up, we can always come back and increase the percentage again.

“I know some people will say I am raiding the Permanent Fund, but this isn’t the case. I’m simply trying to solve our budget deficit without having our citizens pay for it by creating new taxes.”

The bill has been referred to the House State Affairs Committee and the House Finance Committee. It is now in the State Affairs Committee, chaired by Rep. Jeannette James, R-North Pole. Rokeberg said he knows full well that some of his colleagues are shy about backing the bill for fear they will be accused of trying to raid the Permanent Fund.

“But,” he said, as I speak to them about the bill, and point out that this keeps us within the constitutional mandate and would eliminate the need for new taxes, they seem to be more interested in supporting the bill.” Rokeberg said he spoke with Rep. James about the bill and requested public hearings.

“I think I convinced her to hold hearings on the bill before the end of March,” he said. “I can’t speak for the rest of the Legislature, but I am so opposed to new taxes on the public that I will push to get this bill passed because I think it is the best way to solve our current financial problems,” Rokeberg said.

“I think we’ve done a good job of cutting state operating expenses the past four years,” he explained, “but the state work force makes up about one-third of our economic flow and, if we cut too deeply, we could cause a recession. So to avoid a recession and new taxes, I introduced HB 96.”

The bill has been co-sponsored by Rep. Gail Phillips, R-Homer.

The only other change in the bill would require oil and gas revenues to be put into the Permanent Fund on July 1, 1999. Rokeberg said this simply changes the current payment scheme from the calendar year to the state’s fiscal year, which begins July 1 of each year.