On October 3, 2013, most Alaskans received their yearly dividend check—Alaska’s small, nearly unconditional, and nearly universal basic income. This year the dividend was $900, up slightly from last year’s dividend of $878, but still far below the level dividends reached at the height of the stock market bubble in 2008. Now that the fund that finances the dividend has recovered from the financial crisis of 2008-2009, dividends are like to rise over the next few years. However, the long-term future of the dividend is in danger from falling oil revenues.
Every U.S. citizen who meets Alaska’s residency requirement (and fills out forms verifying their residency) receives a yearly dividend from the state government. A dividend of $900 per person, therefore, amounts to $4,500 for a family of five. The dividend is financed by the Alaska Permanent Fund, a sovereign wealth fund created out of state oil revenues in 1976. Since then, each year a small fraction of Alaska’s oil revenues have been deposited into the fund, which as grown to $48.5 billion as of December 1, 2013. The fund began paying dividends in 1982. Nearly 600,000 Alaskans received the 2013 dividend.
The fund itself is financially healthy. It has recovered all its losses from the 2008-2009 and it has grown to record high levels. But the rest of the state budget is not in such good shape. Last year the state government reduced taxes on oil companies in hopes that they would respond by producing more oil. The state has yet to see the additional drilling, but they are feeling the effects of lost revenue. Some legislators are talking now about raising taxes on individual Alaskans to make up for the revenue lost to the oil companies. With low taxes on oil and declining oil revenue, pressure could eventually amount to divert the returns of the Alaska Permanent Fund away from the Alaska Dividend toward ordinary state spending. At least some Alaskan legislators, State Senator Bill Wielechowski for example, argue for restoring taxes on the oil companies.
Recent articles on the Fund and Dividend include:
Senator Bill Wielechowski, “Compass: Repeal SB 21 and start real partnership with oil industry,” Anchorage Daily News, November 23, 2013.
Alex DeMarban, “Bigger dividend checks likely as Permanent Fund swells $4.3 billion in 2013,” the Alaska Dispatch, September 27, 2013.
Craig Medred, “Alaska PFD: Oil wealth dividend will help federal workforce,” the Alaska Dispatch, October 2, 2013.
Dermot Cole, “Forget $900. The important Alaska Permanent Fund amount is $47 billion,” the Alaska Dispatch, September 18, 2013.
Jennifer Canfield, “Alaskans to receive $900 for 2013 PFD check,” Juneau Empire, September 18, 2013.
Carey Restino, “Opinion: When used thoughtfully, the annual Dividend can be far more permanent,” the Arctic Sounder, September 27, 2013.
Linda Watt, “Alaska far from ‘self-reliant’ image,” The Spectrum, Aug. 26, 2013.
Austin Baird, “Looking Back at the Permanent Fund, Looking Ahead to the PFD [Interview with Jamie Love],” KTUU-TV, August 16, 2013.