State lawmakers knew they would have to dip into the Permanent Fund earnings to cover state spending; on Wednesday, they rolled out a plan for coming years.

A special joint committee made up of three members each from the House and Senate briefly discussed the plan and adjourned without taking action.

The two chambers have long differed on how much of the fund’s value should be used for state spending and the dividend checks.

The proposed compromise would use 5.25 percent of the fund’s average value over the past five years. This rate would remain in place for three years. Afterward, the percentage falls to 5 percent.

When the next budget cycle begins July 1, it will be the first time in state's history that Permanent Fund earnings get used to fund state government.

The bill does not affect this year’s $1600 dividend the Senate and House agreed upon last month. Nor does it redefine how future dividend payouts get calculated.

The Senate introduced the original bill, Senate Bill 26, last year, and it included a statutory spending limit, which is now a separate bill advanced by Majority Leader Peter Micciche (R-Soldotna).

The House returned the bill back to the Senate, placing conditions that include a broad-based state tax and an oil tax increase.

The Senate also wanted 75 percent of the draw for state spending and 25 percent for permanent fund dividend; the House proposed a 67-33 percent split.

All of those provisions have either been stripped or expired from previous drafts.

The committee took no vote on the bill Wednesday. Instead, they let members go back to their respective chambers to review the compromise.

The committee will still have to meet and vote on the bill in an upcoming meeting that has not been scheduled. Once a vote gets taken, respective votes from the House and Senate remain. 

In a separate but related development, the Permanent Fund Corp. released updated investment results through the third quarter on Wednesday.

The Fund said investments gained nearly 9 percent through the current fiscal year that ends June 30. The fund is up nearly 5 billion since July 1, 2017. Its total assets are pushing $65 billion.

Committee co-chair Sen. Anna MacKinnon (R-Eagle River) said in a prepared statement about the compromise to SB26:

“Transitioning to a structured, rules-based withdrawal mechanism to allow some Permanent Fund earnings to help support state government and essential services is widely acknowledged to be the single most important action we can take to resolve our state fiscal problems. This action alone will solve more than 80 percent of our deficit.”

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