Alaska lawmakers have been loathe to touch even the earnings of the Alaska Permanent Fund, because they feared cries of ''Raid!'' and the suggestion that using earnings to pay for government might cut into Alaskans' yearly dividend checks. The markets have no such qualms. The markets are remorseless, and care not a whit for Alaskans' dividends. That's why, unless the bull rallies against the bear, our dividend checks could fall to zip in 2003.
Talk about a rude awakening.
Picture the politician touting his stalwart defense of your dividend while Wall Street bears eat all of our lunches. ... In 2000, dividends pushed $2,000. Now, even if the Permanent Fund's investments recover in the next nine months, the 2003 dividend will be about $1,200.
Before alarm bells go off, let's keep perspective. What we're getting now is a dose of reality. Alaskans, like everyone else in the United States, heard throughout the 1990s that the ever-upward run of the market couldn't and wouldn't last. Yet often we still talk as if we're surprised that stock prices dared to fall.
This is no surprise. It's more of a wake-up call. Markets have hammered the fund and cost us billions of dollars in value. So, for that matter, have the political choices that led legislators to draw down the Constitutional Budget Reserve -- which is essentially just another financial asset -- in nine of the past 11 budget years.
All of this is a reminder of economic reality -- and the need to get Alaska's financial house in order to better withstand the market's hard knocks. One of the best ways would be to establish the 5 percent payout rule long advocated by the Permanent Fund trustees to stabilize dividends and protect the fund for the long run.
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