By SUZANNE DOWNING
March 5, 2026 – The powerful Alaska Senate Finance Committee introduced a new proposal Thursday that would gradually reduce how much the state may draw from the Alaska Permanent Fund each year, potentially tightening the amount available to fund government and Permanent Fund dividends in the future.
The measure, Senate Bill 274, is sponsored by the committee itself and led by its co-chairs: Bert Stedman, Lyman Hoffman, and Donny Olson. Kelly Merrick serves as vice chair of the committee.
SB 274 would reduce the state’s current Percent of Market Value (POMV) draw from 5% to 4.5% through a phased schedule beginning later this decade. Under current law, Alaska can draw up to 5% of the fund’s average market value over the first five of the preceding six fiscal years to help fund state government.
The new bill would gradually reduce that allowable draw as follows:
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Fiscal year ending June 30, 2029: 4.9%
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Fiscal year ending June 30, 2030: 4.8%
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Fiscal year ending June 30, 2031: 4.7%
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Fiscal year ending June 30, 2032: 4.6%
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Fiscal year ending June 30, 2033 and thereafter: 4.5%
A second provision of the bill would lock the formula permanently at 4.5% beginning July 1, 2032.
The legislation also clarifies that the “average market value of the fund” includes the balance of the earnings reserve account but excludes the portion of the principal tied to the historic Amerada Hess settlement.
The proposal comes as lawmakers continue to struggle to balance the state budget. Despite ongoing deficits and debates over taxes, spending cuts, and the size of the Permanent Fund dividend, SB 274 proposes lowering the maximum allowable draw from the fund rather than increasing it.
The Permanent Fund’s POMV draw has become the central mechanism for funding Alaska’s government.
Over $4 billion is transferred annually from the earnings reserve account to the general fund under the formula, supporting state services and helping pay for dividends.
Supporters of a lower draw have long argued that reducing the percentage would better preserve the long-term value of the fund. But reducing the allowable draw could make it even harder for lawmakers to balance the budget without new revenues or deeper spending cuts.
The measure is expected to be taken up first in the Senate Finance Committee, where its sponsors control the state’s budget process and often shape major fiscal policy proposals before they reach the full legislature.
7 thoughts on “Senate Finance bill would reduce amount taken from Permanent Fund for state operations”
So the Senate thinks it’s better to suffer excruciating toothaches for 5 years, instead of just getting it jerked and put and end to the misery in one year?
That is a lot like having to put air in your tire every time you drive because you don’t want to spend $20 to get the hole plugged…
Thankfully we’re down to the last two months of Lyman Hoffman.
But there are 59 other legislators who agree with these baby steps taper down approach to reducing Alaskans government dependency.
Willy is right though. Making a hard choice today would be better so people can plan out their lives better than being strung along like all is good before getting cut later and possibly in their middle or senior years when hard choices are inevitable and GenX and millennials no longer have their younger years for drastic changes.
Lets not get it twisted, stepping down immediately would certainly be preferable, but we should be coming with pitchforks for anyone trying to leave it at 5% indefinitely.
This seems like it could actually go somewhere, but only if the R minorities hold their noses and back Lyman’s bill, there is no way all the D’s in the majorities are going to be okay with decreasing their allowance to fund pet projects and services.
They could do that without passing a new law, they could also withdraw less than 4.5%, they won’t but they could. If they put a limit on it, like they have with the 5% limit, they will fund to that level and then use the dividend to pay for the rest of their spending lije they already do. In summary it really doesn’t matter if it’s 5% or 4.5% because they will be sure to find a way to spend as much as possible.
Not how it works (…’fund to whatever level and THEN take the rest out of the PFD’). The PFD and the money they put in the normal spending budget all comes out of the 5%… So they can’t also take any more from the PFD if the total draw is set to 4.5%, the PFD is not separate from this draw mechanism, it is one component of “spending” within this draw mechanism. It does mean there would be a smaller pool of money overall for both government spending and PFDs.
All that said, with or without this change, the legislature + Governor COULD overdraw above the limit (up to spending the entire 13+ billion out of the ERA in one year, on dividend refunds or a gasline or anything else), but at least so far have not done that, even when it would be convenient for various groups (pro education spending, pro pfd spending, disaster spending, or any other reason)
So you say it’s not how it works and then explain that it could work that way, which is it?
You should probably read what I wrote again and think about what it was that I said. Here’s a hint, they can take all of the dividend, hope that helps.
Let us, as united citizens of Alaska, hold hands, hold a candlelight vigil for the Permanent Fund Dividend. We loved you well and you’ll be missed, but the end to all things, to all of us, must come.