Alaska distributed its yearly Permanent Fund Dividend (PFD) on October 4, 2012. The amount was disappointing, only $878—down from last year’s dividend of $1,174 and the smallest dividend since 2005. The 2012 dividend was only the second dividend in the last 20 years to be below $900, and it is well below the all-time highest dividend of $2,069 in 2008 ($3269 including a one-time supplement the state added to the 2008 dividend).
The PFD is a sort of a yearly, variable basic income, given to all U.S. citizens (men, women, and children) who fill out a form showing that they meet the state’s residency requirement for eligibility. This year nearly 650,000 Alaskans received the dividend. It is financed by the Alaska Permanent Fund (APF), which is a sovereign wealth fund owned by the state and financed in turn by the accumulated savings from the state’s oil exports. The dividend varies considerably from year-to-year because the amount is calculated from a complex formula averaging the last five years of returns to the fund. The dividend is down this year because of the poor performance of international stock and bond markets over the last five years.
Even this year’s small dividend will come to $4,390 for a family of five, and the dividend makes a big difference in the lives on many Alaskans. The dividend is one reason Alaska is the most economically equal of all 50 states. According to Russ Slaten, “the oldest applicant was 107 years-old, and the youngest was born minutes before the qualification deadline on December 31 of last year.”
According to Jeff Richardson of the Fairbanks Daily News-Miner, Alaskan retailers have seen a smaller-than-usual bump in sales around dividend time this year because of both the smaller changes and in the higher cost of fuel oil. The smaller effect on retail sales might also be partly attributable to the increase in people donating all or part of their PFDs to charities through the state’s Pick-Click-Give program that allows people to direct some or all of their PFD to the charity of their choice in a few steps on the internet. This year, 23,000 Alaskans gave more than $2.2 million through the program, four times as much as they gave in the first year of the program (2009).
The PFD has largely escaped the demonization given to many programs that promote equality, probably because it provides tangible benefits all Alaskans, rich and poor alike. According to Jeanne Devon, “Even those who gripe about it in theory don’t want to actually give up their own Alaskan ‘entitlement.’ It is our oil, after all.”
The yearly fluctuations in the fund do not signal a long-term threat to the PFD. The fund has had a healthy grown trend since its inception, and it continues today. The bigger worry for the future of the Alaska Dividend is gradual decline in the state’s oil revenues. The amount of oil flowing through the Trans-Alaska Pipeline System is getting dangerously close to the minimum level needed to keep the pipeline system open. Most of the state’s operating budget comes from oil exports, and the state budget is not well prepared for the loss of oil revenue. Gradual decline (or a sudden drop) in oil exports would put enormous pressure on the state budget and might inspire the legislature to divert returns currently used to financed the PFD toward regular government spending.
For more recent stories on Alaska’s PFD, see the following stories:
“Alaskans to get $878 in yearly oil wealth payout”
By Rachel D’Oro Associated Press, September 18, 2012
“Smaller Alaska dividend check likely to disappoint … for good reason”
Carey Restino, Bristol Bay Times, Sep 20, 2012
“Dividend set: Alaskans shouldn’t forget fund’s purpose”
Fairbanks Daily News-Miner Editorial Sep 18, 2012
“2012 Permanent Fund Dividend is $878”
SIT News Ketchikan, Alaska, September 18, 2012
“Permanent Fund Dividend Lowest Since 2005”
Russ Slaten, Your Alaska Link, Sep 19, 2012
“With Alaska’s higher costs, dividends won’t go far”
Mark Thiessen, Associated Press, Sep 18, 2012
“PFDs still good for business, but not like the glory days”
Jeff Richardson, Fairbanks Daily News-Miner, Sep 19, 2012
“Happy Socialist Money Grab Day, Alaska!”
Jeanne Devon, the Mudflats, September 19, 2012
“By the numbers: Alaska Permanent Fund Dividend”
Eric Christopher Adams, The Alaska Dispatch, Sep 18, 2012
“Alaskans donate $2.2 million from PFDs using Pick.Click.Give.”
Alaska Dispatch, Oct 06, 2012
“Count the ways Alaskans spend their $878 Permanent Fund check”
Alaska Dispatch, Oct 05, 2012
“It’s time to cut state spending: The numbers show future has arrived”
Bradford Keithley, Fairbanks Daily News-Miner, Oct 07, 2012
PFD program generates record amount for Alaska nonprofits
Anchorage Daily News, October 5, 2012