Starting on July 1, 2024, the Alaska Permanent Fund will enter the new fiscal year with a $600 million shortfall. Lawmakers have saved $3.8 billion from the fund for next year’s budget and the Permanent Fund dividend, with an additional $1 billion set aside for inflation-proofing. These withdrawals exceed the available revenue in the fund’s spendable account.
Deven Mitchell, CEO of the Alaska Permanent Fund Corporation, addressed a joint legislative committee on Monday, June 24, stating, “That’s the first time that we’ve been in this scenario.”
Investment earnings over the next year are expected to cover the shortfall. However, if investment returns are poor, fund managers might not meet the state law’s 5% annual draw for state services and dividends. According to Mitchell, “We don’t want to be alarmist. There’s a lot of potential to make adjustments to eliminate this perceived cliff.”
The $80 billion fund is divided into two accounts. Nearly $70 billion is in the constitutionally protected corpus, which cannot be spent. Around $10 billion is in the Earnings Reserve Account, which the legislature can pay out with a simple majority vote. However, most of that money has already been allocated.
The legislature established the annual 5% draw in 2018. Since then, the earnings have been the state’s primary revenue source each year except in 2022.
