Alaska needs new taxes because the Permanent Fund alone cannot fix state budget problems, a financial adviser told the Senate Judiciary Committee Monday.
“Revenue raising would have to be part of the solution,” said Malan Rietveld, a global wealth fund analyst who described himself as a consultant to the governor’s office.
In a presentation to Senate lawmakers, Rietveld emphasized advantages to protecting the Permanent Fund program and dividend in the Alaska Constitution, which Gov. Mike Dunleavy proposed in an amendment before lawmakers in special session.
“I have no qualms about what is in the proposed constitutional amendment. As policies they are very sound,” Rietveld said.
Any changes to the Alaska Constitution would require two-thirds support from both chambers and voter approval in a statewide ballot.
Under Dunleavy’s amendment, there would be a guaranteed 50/50 split between funding for state services and dividend payouts to Alaskans.
The split would enable Alaskans to feel they have more stake in the Permanent Fund and its future, Rietveld said.
The amendment would limit the annual transfer from the Permanent Fund to the state treasury at 5% of the fund’s average value over several years.
Sen. Robert Myers noted the challenging economy in Alaska, which the Fairbanks Republican described as “volatile and anemic.”
“Particularly for lower income Alaskans, the Permanent Fund dividend is an important part of their welfare,” Rietveld responded. “Having a dividend that is more predictable and stable, which the constitutional amendment would achieve, is helpful.”
The fund’s purpose has evolved from “purely savings” to income generation for Alaskans and fiscal stability for the state economy, he said.
“Those are increasingly important functions. Given the shift that has taken place, there is importance and value [to] shoring it up in constitutional language,” Rietveld said. “It takes contentious decisions off the table and makes sure you are consistent.”
Among the state’s vulnerabilities, he noted is its dependence on gas and oil revenues. “It puts you in the company of Middle East countries,” Rietveld said, comparing Alaska to Saudi Arabia and the United Arab Emirates.
Factors that range from climate change to fluctuating oil and gas prices create “an uncertain long-term outlook for commodity production,” he said.