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More than half a million Alaskans can pay for a snowmachine, a round of drinks in a really crowded bar or a few months' groceries with the largest dividend ever paid by the Alaska Permanent Fund $1,963.86.
Revenue Commissioner Wilson Condon announced the payout today, giving the booming stock market of recent years credit for the growth of both the fund and the payment the state will make to 585,800 eligible men, women and children next month.
The fund grew from $14.9 billion in 1995 to nearly $28 billion this year, while the dividend doubled from $990.30 in the same period. Last year's dividend was $1,769.84
But Condon warned that the rapid growth may not continue. Because the payout is calculated using a five-year average of the fund's earnings, the dividend will drop if weak years replace the record earnings of 1998 and 1999.
"The dividend has dipped in the past and will again," Condon said. "It's as inevitable as the rain in Juneau or the snow in Anchorage or the cold in Fairbanks."
The $1.15 billion paid out in dividends to people who lived in Alaska for all of 1999 will fuel an annual binge of spending on everything from cheap whiskey to hot tubs to college tuition.
The arrival of the money next month by direct deposit and conventional check also spurs a flood of sales and special offers as businesses ranging from small-town groceries to airlines try to cash in on the boom. In some of Alaska's rural villages, the dividend is sometimes the only significant influx of cash residents have to pay for boats, snowmachines, firearms and ammunition they use for subsistence hunting and fishing.
"We've actually got a lot of people who have already shopped and picked things out and they're just waiting for their dividend," said Steve Woodward of Northern Power Sports in Fairbanks, which sells snowmachines, motorcycles and four-wheelers.
However, some of the money will be garnished by the state to pay delinquent child support, back federal taxes, overdue student loan payments and other debts. Last year, child support took $14.4 million, student loans took $13.3 million and court judgments took $10 million, said Paul Dick of the state Permanent Fund Division.
As oil production declined in recent years, pressure increased to use some of the fund's earnings to pay for the operation of state government, but a budget-balancing plan that would have shrunk the dividend was soundly rejected by voters in an advisory election last year.
Despite that vote, Condon used the announcement of the dividend to renew a call for a long-term solution to the state's financial problems.
"The state as a whole needs to get its financial house in order," Condon said. "Oil prices are up this year, and all is well for the time being for the state budget. But prices will fall again, and we need to face that day with honesty and a plan, not avoidance and a prayer."