Finance committee hears plan to split Permanent Fund POMV: 75% general fund, 25% for dividends

Senate Bill 109, presented to the Senate Finance Committee on March 6, 2025, would change how the state uses the Permanent Fund annual percent-of-market-value (POMV) payout by allocating 75% of the annual draw to the general fund and 25% to pay permanent fund dividends.

Pete Eklund, staff to Senator Hoffman, told the committee SB109 “continues the discussion for a long term sustainable fiscal solution for the state of Alaska” and that the bill “establishes a split from the annual POMV draw with 75% of the draw remaining in the general fund and 25% of the draw appropriated to pay permanent fund dividends.” He framed the change as an attempt to reduce uncertainty in the budget process and the dividend calculation.

Megan Wallace, chief counsel for Legislative Legal Services, described a key drafting choice on page 2 of the bill that changes statutory language from a mandatory transfer (“shall transfer”) to permissive language (“may appropriate”). Wallace cited the Alaska Supreme Court decision in the Willikowski case (2017) and summarized its holding: despite statutory language that appears mandatory, the legislature’s appropriation and veto powers mean the use of earnings in the earnings reserve account remains subject to annual appropriation.

Committee members questioned whether a new payout formula would distort investment incentives for the Permanent Fund Corporation. Pete Eklund and other committee members discussed how the Permanent Fund’s shift from low‑risk bond holdings to more diversified and illiquid investments has produced timing effects—sales of real estate or other assets can spike statutory net income and produce volatility in dividends under the older formula. Committee discussion noted that switching to a POMV‑split approach should reduce those timing‑related spikes in dividend payouts.

No action was taken; the committee set SB109 aside for further review.