ANCHORAGE (AP) -- Eligible Alaskans will receive a Permanent Fund dividend of about $1,550 in October, but for a brief time in July it looked like the state wouldn't be able to make the payment.
A plunging stock market had temporarily wiped out the fund's reserve account, where investment profits go. Under state law, only this account can be tapped for dividends, not the fund's massive principal.
The crisis is over and dividends will be fully funded, Permanent Fund managers said Tuesday. Money has been set aside to protect the fund from inflation.
But the possibility of reduced or no dividends exposed a major threat to the yearly payout to every eligible Alaskan. Although the problem has now passed, next year's dividend could be vulnerable if the fund's stock market losses continue.
The fund was worth $22.7 billion on Monday. But like most investors, it is facing tough times. The hefty surplus the fund accumulated in past years has dwindled.
''We're in one of the worst bear markets in 75 years,'' Bob Storer, the fund's executive director, told the Anchorage Daily News.
Gregg Erickson, in the latest issue of his Juneau newsletter, the Alaska Budget Report, outlines a week of intense debate over whether it could legally transfer to the state Department of Revenue the $930 million needed for this year's dividends.
According to Erickson, the earnings reserve was $400 million short of the amount needed on July 23.
''It wasn't a crisis,'' Storer said. Rather, it was a procedural question, he said.
Under law, when the fiscal year ends on June 30, the fund is supposed to assess its earnings reserve and calculate the amount of money needed for dividend and inflation proofing. In the past, the money has always been there. It was this year, too.
But the fund traditionally hasn't transferred out the dividend money on June 30. Usually it waits until September, to cover dividend payments going out in October.
During the first three weeks of July, the stock market nose-dived, leaving the earnings reserve far short of the amount needed.
The money was transferred on July 26. By that day the stock market had surged back, replenishing the reserve fund sufficiently to cover the entire dividend transfer with $62 million to spare, Storer said.
''It was good karma,'' said fund spokesman Jim Kelly.
For next year, fund managers expect $741 million will be needed to pay dividends and $306 million to protect the fund from inflation. And based on projected investment returns, the earnings reserve account is expected to stand at a comfortable $2.2 billion by the end of the fiscal year.
However, if the stock market continues to struggle and the earnings reserve fund is low or in the red come June 30, there won't be enough money to fully pay dividends, Storer acknowledged.
State Revenue Commissioner Wilson Condon will announce the amount of this year's dividend next Wednesday. The payments begin Oct. 9.
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