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Senate Finance hears plan to lower Permanent Fund draw rate to 4.5%

Alaska State Senate Finance Committee · March 12, 2026

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Summary

At a first hearing, staff for the Senate Finance Committee introduced SB 274, which would phase the Permanent Fund’s POMV draw rate from 5% to 4.5% beginning FY2029 via 0.1 percentage-point annual steps; committee members asked for more modeling and the bill was set aside for further review.

Senator Stedman, chair of the Senate Finance Committee, opened the March 12 hearing by introducing Senate Bill 274, which would change the percent-of-market-value (POMV) calculation used to determine annual appropriations from the Alaska Permanent Fund. "The purpose is to lower the draw rate of the permanent fund to strengthen the long term growth of the fund," David Scott, staff to Senator Stedman, told the committee.

Scott described SB 274 as a phased reduction that would step the POMV draw down by 0.1 percentage point per year beginning in fiscal 2029, moving from a 5% draw toward 4.5% to “preserve the purchasing power of the Alaska Permanent Fund against inflation,” he said. He noted the bill contains conforming language for an existing carve-out and includes delayed effective dates intended to give the next legislature a single budget year under the current 5% rate before the step-downs begin.

Committee members pressed for modeling that shows how the change would behave in different market conditions. "If we get into the opposite type of market conditions, it pulls the other direction," said Senator Kaufman, asking the presenters to test declining-market scenarios and the stepdown’s net effect in adverse sequences of returns. Scott and the chair said Legislative Finance and Callan will provide additional modeling in a future session.

Senator Keel summarized the Department of Revenue/Alaska Permanent Fund Corporation fiscal note for the committee and said the operations section shows no increase in administrative costs. The transcript records the fiscal-note discussion as describing a decrease in flows to the general fund beginning in FY2029 that the speaker read aloud as "85, I think that's million dollars per year, gradually increasing to $3.78 in fiscal year 2032," but the committee asked staff to produce a clear chart of the fiscal projections at the next meeting for public review because those figures were not clearly read into the record during the hearing.

With no public testimony signed up and no further committee questions, Chair Stedman set SB 274 aside for further review and asked staff to display detailed tables and modeling at the next meeting. The committee did not take a vote on SB 274 at the March 12 session.