Nearly every Alaskan will get oil check for $1,312 this fall
JUNEAU, Alaska — Nearly every Alaskan will receive a $1,312 check this month, their annual share from the earnings of the state’s nest-egg oil fund. Some use the money for extras like tropical vacations but others — particularly in high-cost rural Alaska where jobs and housing are limited — rely on it for home heating fuel or snow machines that are crucial for transportation.
But the unique-to-Alaska benefit has become a blessing and a curse in a state that for decades has ridden the boom-bust cycle of oil, and it now competes for funding with services like public education, health care programs and public safety as lawmakers tap into the earnings to help fund the state budget.
Squabbling over the oil checks’ size has resulted in legislative paralysis, and a Senate proposal aimed at resolving the dividend debate this year fizzled with no agreement.
As Alaska struggles to attract workers and stem a years-long trend of people moving away, some residents are wondering how the dividend fits into the future of a state with no income tax or statewide sales tax.
“You cannot grow anything without investing in it … and we’re not investing money in education, our university system, child care. We’re not investing in the very core services that are going to help grow our state,” said Caroline Storm, who heads an education advocacy group and said her stepchildren left Alaska after high school because they didn’t see opportunities for themselves.
This year, the state Legislature approved a one-time, $175 million funding boost for schools in response to pleas from administrators who said they were being forced to cut programs or increase class sizes. But GOP Gov. Mike Dunleavy cut the funding in half.
Senate Majority Leader Cathy Giessel, a Republican who is pushing for a new pension program as a way to retain state workers, said she is conflicted about the dividend.
“I do understand that there are families that have come to rely on this, and that reliance increased as the size of the dividend increased. This is a tough adjustment in those scenarios,” she said. “At the same time, if we had a more robust economy and job opportunities with livable wages and ... a pension for public employees, folks wouldn’t have to be so reliant on a dividend.”
Residents have received the check known as the Permanent Fund Dividend, or PFD, since 1982, six years after voters in the early days of oil development in Alaska created the nest-egg Permanent Fund to preserve some of the oil wealth for future generations.
The fund is enshrined in the state constitution, which stipulates that at least 25% of mineral lease rentals, royalties and other income related to oil and mineral development go into the fund. The fund’s principal is constitutionally protected, but its earnings are spendable. The dividend is not in the constitution.
Retailers such as furniture chain La-Z-Boy and Alaska Airlines run sales to coincide with the cash distribution, which begins this week with direct deposits. The average check over the program’s 42-year history is about $1,200.
Cynthia Erickson, who lives in the village of Tanana, 130 miles west of Fairbanks, said this year’s $1,312 won’t stretch far in the community of about 220 people where goods must be brought in by plane or barge. Gas is $7.79 a gallon, and the collapse of salmon fisheries and a poor moose hunting season has meant that locals’ freezers aren’t full heading into winter.
But the check is “better than nothing,” said Erickson, who runs the town general store and a bed and breakfast.
As lawmakers weigh the dividend’s future, Erickson favors “something that’s reasonable, not too small and not too big. We don’t want too big to wipe it out. We want to make it consistent to where it’ll last longer, and a fair amount. Anything we’re happy for, anything helps.”