An Alaska senator wants to guarantee a Permanent Fund Dividend this year in case an obscure state law blocks payments because of stock market losses in recent years.
Dividends are paid only from investment earnings, which accumulate in the fund's "earnings reserve" account every year. In years of losses, that reserve account can go down, which is what happened recently.
Sen. Bill Wielechowski, D-Anchorage, introduced a bill allowing dividends to be fully paid this year. The bill, which applies only to 2010, would override the limitation on how much of the earnings reserve could be paid out.
Wielechowski was unavailable for comment Wednesday afternoon.
Permanent fund officials estimate that they'll provide about $770 million for the dividends, which would be divided among a yet-to-be-determined number of applicants. The problem comes from a law that says that only one half the earnings reserve can be paid out each year.
The earnings reserve currently stands at $895 million, meaning that the maximum amount that could be paid out is $447.5 million. That would result in smaller dividend pay outs. The total amount in the earnings reserve could still go up, depending on what the Fund's stock and other investments do between now and the end of the fiscal year. If the total value of the Fund is now at $34.1 billion.
Fund officials have been aware of the issue for some time now, and began alerting legislators last fall.
Since then, however, the market has been rising, but not yet enough to make the issue disappear altogether.
"We've definitely made up ground since November, when we had our initial meetings with legislators letting them know where we stood," said Laura Achee, spokesperson for the Alaska Permanent Fund Corp.
At that time the earnings reserve was at $453 million, less than half of it is today.
Permanent Fund dividends have been paid since 1982 out of the Alaska Permanent Fund's investment earnings. They've ranged between $331 and $2,069, paying out more than $17 billion total, but have never before fallen under the obscure provision.
Contact reporter Pat Forgey at 586-4816 or email@example.com.