Senator Stedman outlines phased reduction of Permanent Fund payout rate; Finance Committee advances SB274
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Summary
Senator Stedman said SB274 would lower the Permanent Fund appropriation rate from 5% to 4.5% over five years starting in fiscal year 2029 to reduce portfolio risk and allow fund growth; the Finance Committee advanced the bill by unanimous consent.
Senator Stedman reintroduced Senate Bill 274 on April 1, saying the bill would phase down the Permanent Fund appropriation limit currently at 5% by 10 basis points per year for five years—to 4.9%, 4.8%, 4.7%, 4.6% and finally 4.5%—with the phased reductions beginning in fiscal year 2029.
"What that will do... is lower the appropriation coming out of the permanent fund 10 basis points a year for 5 years getting it down to 4.5%," Stedman said. He argued the change would reduce risk to the earnings reserve account under fluctuating markets, stabilize the outflow, and increase the probability that the state can meet payout obligations. Stedman added that drawing less each year could allow the principal to grow so future generations of Alaskans may receive larger payouts, but that it could take a decade or more to observe that crossover point.
Chairman Hoffman asked members for questions; none were raised. Senator Stedman moved SB274 (version I) from committee with attached fiscal notes and recommendations. Seeing no objection, the committee advanced the bill to the next referral by unanimous consent.
The bill reduces the statutory appropriation percentage on a phased schedule starting in FY29 according to sponsor statements; the committee action was an advancement, not final passage of the policy.
