Out-of-state residents shouldn't get dividend

Posted: Tuesday, April 06, 2004

Alaska residents who live Outside face the threat of losing one of the sweetest deals ever. They are in jeopardy of no longer receiving Alaska Permanent Fund dividends, which they can collect for 10 years after leaving the state.

Here's the deal: A military family with two kids comes to Alaska for a three-year assignment. Then the family is transferred to another state, with no plans to ever live in Alaska again. As long as the parents aren't honest about the unlikelihood of becoming Alaska residents again, they can collect four dividend checks. In a year with $1,000 dividends, that would be $4,000 and more like $40,000 over a decade.

And all this from a state that's in fiscal crisis.

We're not talking about just a few families here. We're talking about enough people that dividend checks sent to out-of-state residents totaled about $19 million last year. In 2000, the year in which the heftiest dividend checks were mailed out, $30 million went to people living out of state.

While legislators are grappling with contentious proposals on income and sales taxes, oil royalties and tapping into the permanent fund to cover state services, the state is giving millions away to people who are working the system.

This is one of the most ludicrous loopholes ever, and Rep. Paul Seaton is trying to close it. The Homer Republican introduced legislation this week that would prevent former Alaska residents from collecting dividends until they return to the state for one year.

No doubt there are genuine Alaska residents who move away temporarily for good reasons such as college and military service and have every right to collect a check as other Alaskans do. But Seaton's bill provides for these people. They can collect their dividend checks when they return.

The legislation may have the added bonus of shrinking Alaska brain drain. The state lost some 30,000 citizens in the 1990s because they moved to other states after graduating from college, estimates University of Alaska President Mark Hamilton. But knowing that thousands of dollars are waiting for them may persuade some to bring their talents and education back to their home state after school.

The Alaska Permanent Fund Division does not have firm numbers on how many of these out-of-state dividend recipients are genuine Alaska citizens or members of the U.S. military or others who are bilking the system. But permanent fund division employees who work with these applications each year say that if the out-of-state checks were counted, the majority would go to those in the military.

Seaton says that he's got support from military personnel for his bill and that many members of the military see the abuse of the system for what it is. Clearly, they don't want their reputation tarnished by those who have no qualms about lying for thousands of dollars.

The most regrettable thing about this piece of legislation is that nobody thought of it sooner.

Alaska has the embarrassing distinction of being the only state to shell out millions of dollars to citizens just because they used to live here. The state needs to lose this distinction and legislators should push Seaton's bill through as quickly as possible.

Juneau Empire

April 4

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