Ethics crawls along

The House State Affairs Committee is still wrestling with its omnibus ethics bill, an approaching-30-pages monster that is likely to continue growing. Committee Chairman Bob Lynn swears he's going to finish markup tomorrow and send the bill along to its next committee. Meanwhile, the Senate is trying to pass a pair of stand-alone ethics bills, and has more moving through its committee system.

The long and short of it is this: We're still quite a ways from finishing our work on ethics.

How big is the budget?

I can only give you rough numbers at this point, but Gov. Sarah Palin's proposed budget for next year is somewhere between $650 million and $800 million bigger that this year's. That's a whopping increase, 20 percent or more. Some of it is unavoidable if the state is going to do things like pay school districts' retirement system shortfalls, state employee raises and so on. Some of it is for new and/or expanded programs.

I don't know the details, but I can tell you that no matter how worthy every dollar of spending is, we can't afford this forever. As I've said before, I think we should be spending less and saving more, and this budget doesn't do that.

Happy birthday, Alaska Permanent Fund

The Alaska Permanent Fund celebrated the 30^th anniversary of its first deposit this week. The corporation that manages it threw a punch-and-cake party in the Speaker's office on Wednesday. The highlight for me was a slide show that included snapshots of lawmakers who made the fund what it is today: Hugh Malone, Clark Gruening and, of course, Jay Hammond.

Also on display was a big copy of the first check to the fund: $734,000. Today, the fund – which is worth $37 billion – makes $734,000 every hour. It's a money machine.

And legislators have their eye on that money. The earnings – that $734,000-every-hour -- are not protected by the constitution. With oil income likely to decline, lawmakers are looking for money to keep paying for big state budgets (see above).

There are two problems with that.

First, some of that money is used every year to keep the fund from being eaten up by inflation. If the legislature starts spending the earnings in a big way – it already spends small amounts – that could endanger inflation-proofing.

Second, the earnings are what pay the annual Permanent Fund dividend. If we don't inflation-proof, the dividend will shrink. And if the legislature spends too much of the earnings, the dividend will shrink. That's not good in my book.

So maybe it's time to change the way we handle Permanent Fund earnings. We could go to a system of spending a percent of market value (POMV) every year. As long as the percent isn't too high, that would automatically inflation proof the fund. And we could split the POMV between dividends and state spending.

But if we did that, we'd have to put the dividend in the constitution. Otherwise, it's a safe bet that spending would eat up all the money, just as it does now with oil income.

How would all that work? Here are some rough numbers.

At $37 billion, a 4 percent POMV would give us $1.48 billion. If we split that two-thirds to dividends and one-third to spending, we'd have a dividend of around $1,500 and just more than $500 million for spending.

That's just an example. We could play with numbers all day. But the components of this idea are: POMV, dividend in constitution, POMV split between dividends and spending.

As always, let me know what you think.

It's party time

Sen. Hollis French, Rep. Lindsey Holmes and I are putting on a constituent get-together at the end of the month. There will be pizza and a clown for the kids. It's happening from 1 p.m. to 3 p.m. on Saturday, March 31 at the Spenard Rec Center. Come and tell us what's on your mind.

Best Wishes,