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State takes millions from Permanent Fund

By   /   July 16, 2010  /   News  /   No Comments

A legislative review of State fund classification revealed several departments have systematically taken revenue from the Permanent Fund Corporation over the past decade in an effort to simulate budget reductions.

The Departments of Law, Natural Resources and Revenue had taken about $7 million annually from the Corporation’s net receipts, the same funds used to pay Permanent Fund Dividends.

“Back in the late 90’s, they tried to close the fiscal gap by decreasing General Fund expenditures and increasing revenues” said Legislative Fiscal Analyst David Teal. “The accusation was, they didn’t decrease spending, they just hid it.”

Teal said the departments began using corporation funds in order to decrease General Fund Spending and give the appearance of overall spending decreases, a move that Teal said is prohibited by State statute.

The error was discovered during the Budget Clarification Project, which incorporated almost 60 minor funds in to the General Fund in an effort to simplify budgetary planning and prevent departments from drawing from minor funds rather than cutting spending.

A note on an internal Finance Division fund spreadsheet said the codes to draw revenue from the Permanent Fund Corporation were used “improperly” by the three departments, “specifically to hide General Fund.”

Teal said the problem would probably be corrected this year but would also require lengthy legislative and procedural changes.

“Any use of earnings of the permanent fund reduces the amount available for dividends,” Teal said. “The impact on dividends is so small it’s almost hard to compute, but it’s something that should never have been allowed in the first place.”

By Kirsten Adams


Kirsten formerly served as staff reporter for Watchdog.org.