Permanent Fund dividend set at $1,654

Checks to pump $1 billion into Alaska economy

Posted: Thursday, September 20, 2007

Gov. Sarah Palin announced Wednesday this year's Alaska Permanent Fund dividend will be $1,654.

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"Oh, baby," Palin said as she announced the biggest check in recent years.

When those checks begin arriving in October, electronically for those who file online and by mail later for others who did not chose direct deposit, they'll pump $1 billion into Alaskans' wallets.

While the fund has grown - it was at $38.7 billion earlier this week and had topped $40 billion before recent stock market declines - it has become increasingly famous outside Alaska.

In "The Simpsons Movie," Alaska's permanent fund dividend was mocked when a customs official at the border handed Homer Simpson a handful of bills in exchange for letting oil companies exploit the environment.

The new higher profile of the permanent fund has led Alaska's members of Congress to warn that it may start to hinder their attempts at bringing federal money back to the state.

The permanent fund was created when Jay Hammond was governor, with a goal of enabling the state's tremendous oil wealth to continue to benefit the state after the dwindling resource finally runs out. Oil production has been declining at a rate of about 6 percent a year recently.

Palin has called a special session of the Legislature to begin Alaska Day, Oct. 18, to review oil taxes.

On Wednesday in Valdez, the southern terminus of the trans-Alaska oil pipeline that ships the oil to market, Palin twice mentioned the nonrenewable nature of the resource, sounding like a warm-up session for the coming special session.

The dividend, she said, "gives some of that value of the nonrenewable resource back" to the citizens who own it.

The fund gets a contribution every year from taxes on oil and the state's royalty share of the oil produced, and it is managed by the Alaska Permanent Fund Corp., based in Juneau. It now grows as much from its investments - stocks, bonds, real estate and other investments managed by the corporation - as it does from the resource revenues.

On Oct. 18, the Legislature will meet in Juneau to look at the state's oil tax structure. After several accusations of bribery in the adoption of last year's Petroleum Profits Tax, Palin said she wants a new session to clear the air.

That way, she said, Alaskans will know they're getting a fair share of the oil resources they own.

Palin also emphasized the public's responsibility in watching what its government was doing with the money it received.

"Hold us accountable," Palin said. "Make sure those dollars are being spent wisely on Alaskans' behalf."

Dividends will be sent by direct deposit on Oct. 3 to those people who filed for them online, said Karen Lechner of the Department of Revenue Dividend Division. Everyone else who selected direct deposit will get their money on Oct. 17. Remaining recipients will have their checks mailed to them beginning Nov. 14.

The highest dividend ever was $1,968.86 in 2000, just before stock markets took a dive. The dividend is based on an average of the past five years' returns, and the last five years have been good ones for the fund.

Last year, the Department of Revenue's Permanent Fund Dividend Division lost crucial dividend data due to a computer error. Things got worse when it turned out backup tapes were unreadable as well.

That's not going to happen again, said Norm Snyder, Department of Revenue Information technology manager.

Last year, the department lacked sufficient disk space to do a full restore of its backup tapes, and they didn't know they weren't working properly until the data was lost.

Snyder said they now have adequate storage space, and that won't happen again.

"We now do periodic restores to make sure they actually work properly," he said.

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