THE "LAZY MOUNTAIN JIM" (JAMES GARHART)
4F PLAN:
FORWARD FUNDING FISCAL FLIP

Lazy Mountain Jim
Palmer, AK
Mar. 15, 2004

Earnings on the Permanent Fund are expected to be 16.15% this fiscal year. The corpus value at the start of the current fiscal year was just over $24 Billion. If we do, in fact, earn around $4 Billion this fiscal year, it would be possible to fully inflationproof the corpus, pay the dividend checks, and have enough earnings left to fully fund one year's general fund budget. Yes, some assets would need to be sold to realize the required earnings, but at a value of $28 Billion at fiscal year end, it would require about 8.4% of market value. This would be one year, one time only, to allow a forward funded general fund budget from here on out. Keep in mind the Permanent Fund Board advocates making 5% available for spending every year!

$24 Billion X.0228 inflation $547,200,000 inflationproofing

$24 Billion x.1615 earnings $3.876,000,000 unrealized earnings $ - 547,200,QOO'inflationproofing $3,328,800,000 balance -2,328,800,000 1 year general fund $1,000,000,000 balance unrealized earnings to corpus or earnings reserve

Permanent Fund checks are paid from earnings reserve. Current balance estimate projected to be $872,000,000 AFTER current fiscal year checks paid out.

I propose we do a "Fiscal Flip" and change the basic funding of the general fund budget process. The general fund would start with 5% of the market value of the Permanent Fund. This 5% MUST come out of that fiscal year's earnings, however, and NEVER out of the corpus. The approximately $300 Million from "other" tax revenues, such as gasoline, alcohol, fish, tobacco, etc., also go into the new general fund. ALL resource revenues are pooled into one. This requires changing Article 9, Section 15, of the State Constitution. The State receives a 40% commission for managing the people's resources. This goes into the new general fund. The other 60% of resource revenues is divided by the number of qualified applicants and is the new constitutionally protected dividend check program. This is more appropriate as the dividend becomes directly related to the sales of OUR resources. It also minimizes the effect that Low oil prices have on the annual general fund budget.

P.F. Market Value $27 Billion x.05 P.O.M.V. P.F. Market Value $27 Billion x.05 P.O.M.V. $1,350,000,000 $1,350,000,000 other taxes + 300,000,000 other taxes + 300,000,000 $1,650,000,000 $1,650,000,000 40% oil at $30 B1. + 960,000,000 40% oil at $20 B1. + 640,000,000 New General Fund $2,610,000,000 New General Fund $2,290,000,000 "Deficit" +100,000,000 General Fund $2,390,000,000

For "deficit" use C.B.R., earnings reserve, or CUT the $100,000,000.

60% Oil dividend checks (630,000 qualified applicants)

$30 per barrel: $2,285

$20 per barrel: $1,523

Lazy Mountain Jim
James Garhart
P.O. Box 872533
Wasilla, Alaska 99687
Ph# 907-746-2828

P.S. Any surplus over current spending projections should be SAVED and NOT, repeat, NOT spent on increased government!