Alaska Permanent Fund dividend is $1,540.76

Posted: Thursday, September 26, 2002

JUNEAU (AP) -- The Alaska Permanent Fund dividend is $1,540.76, a few hundred dollars less than last year, the state revenue commissioner said Wednesday.

Eligible Alaskans will get $310 less than they did from last year's dividend, said Revenue Department Commissioner Wilson Condon.

While the number of Alaskans expected to share in the annual payment from the state's oil wealth account is on the rise, the stock market was down. Weak returns from the stock market for the past two years drove down the dividend.

The amount of the 2001 dividend was announced at the annual meeting of the Permanent Fund Corp., which manages the $21.8 billion investment fund created from oil riches.

Condon warned that the amount of future dividends will continue to decline as the bearish market catches up with the way checks are calculated.

''We can expect smaller dividends for the next few years,'' Condon said in a statement.

Dividends are calculated based on a five-year average of Permanent Fund investment income derived from bonds, stock dividends and sales and other investments.

For just the second time in its 25-year history, the value of the fund portrayed a loss.

Total market value of the fund was $23.5 billion on the fiscal year ending June 30, the state Department of Revenue said. It was down from $26.5 billion the year previous. Last year, the fund's value fell by $1.7 billion.

While the bond market and real estate investments performed well, the heaviest losses were felt from the stock market, which accounts for 46 percent of the fund's investments.

Robert Storer, executive director for the Alaska Permanent Fund Corp., said the fund has weathered one of the most bear stock markets in 75 years.

Permanent Fund officials again called on the Legislature to enact a law creating a new mechanism to inflation-proof the fund, noting that its earnings reserve account has lost nearly $5 billion since 2000.

A proposal to limit dividend payments to no more than 5 percent of the fund's market value and make the program resemble an endowment failed in the Legislature this year.

An estimated 591,537 Alaskans are expected to receive a dividend check when they are doled out in October, compared to 586,052 who received the 2001 dividend.

In a somber speech that contrasted with the festive trappings of the annual meeting, Condon warned that Alaska faces dire straits.

Residents pay no state income or sales tax and the oil revenues, which account for about 80 percent of state revenues, have declined.

The Constitutional Budget Reserve, a $2.2 billion savings account which has covered past budget shortfalls, is on pace to being empty by 2004, the department estimates.

Condon likened the state's fiscal picture to the Old Mother Hubbard nursery rhyme and said ''our cupboard ... is on its way to going bare.''

''Though some may choose to avoid reality, we are quickly approaching the day when Alaskans will have to help pay for the society we enjoy. And Permanent Fund earnings will be part of that payment plan,'' Condon said.

The GOP-led Legislature rejected a proposal by Democrat Gov. Tony Knowles to reinstitute a statewide income tax and using Permanent Fund earnings for state government has always been a thorny political issue.

Voters overwhelmingly defeated an advisory ballot measure that asked that question in 1999.

In what he called one of his last public acts as commissioner, Condon urged Alaskans to consider using revenues from the fund to pay for state government.

Condon expects to leave office when Knowles' term ends in December. Knowles is in his second term and cannot seek a third consecutive term.

The Permanent Fund was created by voters in 1976 as an investment account for royalties after oil was discovered on the North Slope. The first dividend of $1,000 was paid in 1982.

This year the Alaska Permanent Fund turned $911.4 million over to the state Department of Revenue to pay dividends, the department said.

Permanent Fund checks will be deposited directly into bank accounts on Oct. 9. The first batch will be mailed Oct. 17, the department said.

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On the Net:

Alaska Permanent Fund Corp.: www.apfc.org

State Department of Revenue: www.revenue.state.ak.us



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