A Resolution to the 23^rd Alaska State Legislature in OPPOSITION to HB 11, which over time would reduce Permanent Fund dividends as less money is deposited into the fund from royalty payments. With reduced royalty deposits into the fund, there would be less money to invest and fewer investment earnings to distribute through the dividend program.

WHEREAS, during the special statewide election held in 1999, the voters of Alaska expressed overwhelming opposition to the Legislature’s proposed "Balanced Budget Plan" by a margin of over 4 to 1; and

WHEREAS, the Legislature put this clear question on the 1999 ballot: "After paying annual dividends to residents and inflation-proofing the permanent fund; should a portion of permanent fund earnings be used to help balance the state budget?"; 83% of Alaskan voters answered with a resounding NO; and

WHEREAS, most candidates elected in November 2002 promised they would not touch the Permanent Fund, without a vote of the people; and

WHEREAS, the Legislature and Governor are considering appropriations from the Permanent Fund, which is in opposition to the results of the 1999 advisory vote and election promises of the 2002 election; and

WHEREAS, HB 11 will reduce certain royalty payments made to the Permanent Fund from 50% to 25%, with the proceeds going into the general fund; and

WHEREAS, fiscal notes attached to HB 11 clearly understate potential loss to the Permanent Fund at between $40 and $55 million dollars a year. Those estimates are based on projected revenues from existing oil royalties and do not reflect potential revenue from other sources such as ANWR, NPR, North Slope gas production, new mineral development, timber sales, or other new resource development, any of which could make impact to the Permanent Fund considerably more than the suggested $55 million dollars a year, and

WHEREAS, any reduction of royalties being deposited in the Permanent Fund, as a direct result of HB 11, will cause the fund’s value to grow slower, and dividends paid to the people will be smaller, in direct opposition to the 1999 special statewide advisory election, and campaign promises of the 2002 election; and

WHEREAS, government spending in Alaska now exceeds the average 1980’s budget level, when the North Slope was at peak oil production; and

WHEREAS, North Slope oil production is currently only 50% of the 1980’s peak, with oil royalty payments to the state reduced proportionally; and

WHEREAS, the legislature has failed to recognize the direct correlation between increased state spending and reduced oil royalty payments as being the underlying reason for the growing budget deficit; and

WHEREAS, the legislature has continued to fund our state government at an unsustainable level, by making annual withdrawals from the Constitutional Budget Reserve; and

WHEREAS, the legislature continues to deplete our Constitutional Budget Reserve while failing to submit any plan to repay this "rainy day account", as required by the Alaska Constitution; and

WHEREAS, by continually failing to address the overspending problem, the legislature must soon choose between tapping the Permanent Fund or making the cuts necessary to reduce the size and cost of state government to a sustainable level that corresponds directly to income available and population level; and

WHEREAS, the Permanent Fund dividend is the only direct benefit most people realize as a result of Alaska’s oil wealth; and

WHEREAS, many Alaskans live outside "safety nets" provided by organized municipalities and must rely on the Permanent Fund dividend to survive the harsh winter; and

WHEREAS, the annual Permanent Fund dividend has become a huge economic engine that most business owners rely on each winter; and

WHEREAS, 83% of voters in the 1999 special election clearly said they could spend their dividend better than the state government;

NOW, THEREFORE, BE IT RESOLVED by the Alaska Voters Organization, Board of Directors, that HB 11 be soundly defeated by all those who promised during previous election campaigns to defend and protect the Permanent Fund for all present and future Alaskans;

Alaska Voters Organization, Inc.

P. O. Box 2016

Kenai, Alaska

99611-2016

(907) 776-8008

akvoters@gci.net

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