Checks spark dreams, debates

Alaskans ponder future of oil fund

Posted: Friday, September 26, 2003

Margo Reilly's family won't feel the $443.20 drop this year's Alaska Permanent Fund dividend checks took over the previous year.

That's because the Reillys aren't eligible for the dividend this year.

They recently moved back to Alaska after a year-long stint in Colorado, and Margo Reilly said the money she and her family won't receive will be missed.

"We usually use ours to go on vacation," she said.

Following a rough-and-tumble year on the stock market, the permanent fund earnings did well. Earlier this year, however, any dividend at all was in doubt because of a losing streak on Wall Street.

A proposal from the Alaska Permanent Fund Corp. board of trustees could stabilize the change in dividend amounts from year to year while allowing the legislature a limited amount of money from the fund to pay for government services. Legislators are considering the plan's merits as Alaskans lobby in support or opposition.

After the amount of this year's dividend -- $1,107.56 -- was announced Wednesday night, some Kenai Peninsula residents said they are grateful to receive any money at all.

"It's more than we deserve," said Judy Martin of Kenai. "It's like an extra boost to help out, and it comes in very handy at this time of year."

She said she and her husband use their dividends each year to pay for glasses for the two grandchildren they raise, as well as to pay for annual dental expenses.

"It's usually about $500 for each of them," Martin said. "This year, one had 14 cavities. That was $243 for each cavity."

She said she tries to spend the money in state and on the peninsula.

"We've been in Alaska for 36 years and we've only taken one trip Outside," Martin said of herself and her husband. "And we didn't use our dividends for that.

"A lot of people go to Anchorage to buy things because there is no sales tax there. But we spend it locally."

Reilly said the dividend allows a luxury her family didn't have while they were in Colorado.

"In Colorado, there are people that don't take real vacations -- like to Hawaii," she said. "Middle-class people in the states aren't able to save because it costs so much to live there."

Alaska is the only state with a payout like the permanent fund dividend, returning earnings from oil investments to its citizenry. The 2002 dividend of $1,550.76 was a decrease from the $1,850.28 Alaskans received in 2001, and from the $1,963.86 -- the highest ever -- that was paid out in 2000. Early dividends, however, were much less, with payouts of $333.29 in 1984, $404 in 1985 and $556.26 in 1986, for example.

The permanent fund board of trustees has suggested a percent of market value plan that would limit payouts to a set percentage of the fund's market value. The plan calls for 5 percent of the fund's value to be split between money to be paid to dividends and for the cost of government.

Rep. Mike Chenault, R-Nikiski, said he supports the idea of narrowing the now-volatile amounts people see on their dividend checks.

"People are more interested in having a steady amount versus an up and down amount," he said. "Yes, there would be a smaller check, but it would be a steady check."

James Price, vice president of AlaskaVoters.org, said he suspects the POMV plan is Gov. Frank Murkowski's "scheme" to pad the waning coffers of state government.

"They're trying to use the dividend to make a steady stream to take the permanent fund away from the people," Price said. "One of my concerns is that there is going be no inflation-proofing of the principal."

According to the Permanent Fund Corp. board, however, the POMV offers constitutional inflation-proofing protection of the entire fund.

Because the percent of market value plan requires a constitutional amendment, it can be implemented only with voter approval. Chenault acknowledged that changing the way the fund is managed to allow a limited amount to pay for dividends and for the cost of government raises some questions.

"There are those out there who want to determine if a number is put into state government," he said. "Maybe 50 percent put into paying dividends and 50 percent put into funding government or schools. But I don't know what that number is."

Chenault said House and Senate joint resolutions that support the POMV plan, HJR 26 and SJR 18, should address the two issues separately on a ballot. He said the first question should ask if people will support the percent of market value proposal.

"Depending on how Alaskans voted, would (they) allow a portion of that money to be used for schools or for government and another portion to go to dividends?"

Sen. Tom Wagoner, R-Kenai, said he thinks the state should wait to enact the POMV idea.

"If it ain't broke, don't fix it," he said.

"I think a lot of people don't understand. And furthermore, I think a lot of people don't trust it. This whole thing is about trust. While the POMV may be a good thing to do, I don't think its time is here."



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