Those Alaskans who map out their finances, along with those of us who at least intend to do so, got more information on New Year's Day when the Alaska Permanent Fund estimated the 2003 dividend at $1,200 -- provided the stock market holds steady.
Prudent financial management says it's fine to hope for that $1,200. But don't count on making a house payment with it.
That's because stocks, reliable income producers for much of the 1990s, have suffered declines for the past three years. And a fall of just 6 percent in the market could be enough to leave the Permanent Fund without money to pay any dividends, no matter what the five-year average calls for.
Alaska's politicians have been loath to touch a dime of Permanent Fund earnings to cover government services for fear of losing office; any suggestion of taking even small change from the dividend is viewed as political suicide.
The market, on the other hand, shows neither fear nor mercy. If the fund's forecast is right, the 2003 dividend will be almost 40 percent less than the 2000 dividend -- about $750 less. And continued decline is almost certain, because the five-year average calculation made to determine the dividend amount each year is losing the banner years of the late 1990s.
As market forces beyond Alaska's control take what lawmakers wouldn't touch, you have to wonder whether Permanent Fund earnings will become less sacred as they become less valuable. And you have to wonder what will replace several hundred million dollars that will be missing from Alaska's economy in fall.
You also have to wonder about the slice of earnings Alaska legislators refused to give to a sustainable long-term state budget. In 1999 or 2000, we had the wherewithal to keep a sizable dividend and help pay for state services. Now the Wall Street bears are devouring those earnings -- and leaving us with nothing to show for it.
But the Permanent Fund was designed for the long haul, with a staying power to span generations. The bulls will be back. In the short haul, the bears just might eat our dividends. Those checks have become so regular over the past 21 years that it's hard to imagine they'll be gone this fall. But it's possible. Best not spend them until we know they're coming.
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