IN 1982 DOLLARS, IT’S WORTH …
Today, eligible Alaskans are getting $1,600 Permanent Fund Corp. dividends, their share of the oil wealth coming from Alaska’s North Slope. About $960 million is set to enter the Alaska economy.
It sounds like a lot, but it’s far less than what Alaskans received when the dividend program was established in 1980, due to inflation. Read on.
In 2016, Alaskans received dividends of $1,022, after Gov. Bill Walker made the historic decision to cut their dividends in half. That year, the dividend would have been about $2,052, according to the traditional formula. In 2017, the dividend was $1,100. The traditional formula had it at $2,200.
Today’s dividend would have been nearly $3,000 under the traditional formula.
The amount of the dividend has always been elastic, because it was based on how well investments were doing in the Alaska Permanent Fund Corporation, and was calculated on a rolling five-year average of those investment returns. Some of the oil wealth was skimmed for State government, some for dividends, and some for the corpus of the investment fund.
The original Walker dividend veto was ostensibly to preserve the rapidly declining rainy day savings that the State kept on hand in various accounts to bridge the years when oil prices were low.
Oil dropped from over $100 a barrel in 2014 to $28 a barrel at one point, but has since rebounded to over $80 a barrel today, a range that is considered by many to be adequate to fund State government. Meanwhile, the pots of savings dried up and the state Legislature became embattled with the governor over spending priorities.
Over the course of the Walker Administration, Alaskans have given up $3,700 in dividend payments to the Walker restructuring endeavor.
State government was ultimately trimmed somewhat in terms of the operating budget, but has since expanded. Mostly it was the capital budget that was slashed, and oil tax credits due to North Slope and Cook Inlet explorers were not paid by Walker.
Construction and oil workers left the state in droves and the state lost its high-paying jobs to the booming economy in the Lower 48.
The governor quickly expanded Medicaid to more people, and with now more than 20 percent of the population on Medicaid, the expansion program brought in 4,000 health care workers to the economy, which helped stabilize it from a complete crash. The economy has been in recession for the duration of the Walker Administration.
Alaska Permanent Fund Corporation was created by the Legislature in 1980 for the purpose of managing oil wealth in such a way that the investments would help fund State government long after all the oil is gone. Lawmakers also approved the Permanent Fund dividend program, and the first dividend check of $1,000 was distributed two years later.
Adjusted for inflation, today’s $1,600 Permanent Fund dividend is worth $610 in 1982 dollars.