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State prepares to distribute dividend checks

Bankers expect many Alaskans will save $1,305 payments

Posted: Thursday, September 24, 2009

Permanent Fund Dividend checks this year will be $1,305, providing an $820 million shot in the arm to a state economy struggling to avoid the nationwide recession.

Gov. Sean Parnell announced the dividend amount Wednesday in Anchorage.

Some Juneau bankers think this year's recession may mean a large share of that cash influx will be saved instead of spent.

"It's very possible we're going to see more savings this year than we've seen in the past, just because of concerns about the economy," said Win Gruening, senior vice president at Key Bank in Juneau.

Gruening and other bankers say the arrival of the dividend checks generally results in a surge in deposits as residents save their dividends, at least initially.

Christopher Bourque, chief operating officer at Juneau-based Alaska Pacific Bank, said he thinks even more of it will go into savings this year.

"I think we're going to see more of it stick, going into CDs and savings," he said.

Not all of it will be saved, however, as those who have run up bills or held off making purchases out of necessity can now start spending.

"A good part of it is going to be put in circulation, and that's fine. That's good for the economy," Bourque said.

There's often a fine line between savings, which is good for individuals, and spending, which is good for the local economy, he said.

First Bank's Kurt Mattle said he agreed there was going to be a strong impetus to save this year because of the threat of an extended recession, but he doubted Alaskans already struggling with rising costs would be able to save much.

There's also some pent-up demand that he thinks will be met with the dividend checks.

"Everybody's been holding off spending in town, to see what happens in the future," he said, but now they may treat it like extra money and spend it.

And some may have to. As Alaskans have become more accustomed to receiving the dividends every year, Mattle said many have come to rely on it, rather than treating it as a windfall.

"Before it was found money; now they're expecting it," he said.

Gruening said one possible upside to the downturn is that many people have adopted "much healthier" financial habits.

Key Bank and others will be offering special CD rates to encourage PFD savings, he said.

By this fall, the dividend program will have pumped more than $18 billion into the state's economy. The fund itself remains at $33.5 billion as of Tuesday.

This year's dividend checks will be substantially smaller than last year's $3,269, the record-high amount since the dividend began in 1982. The checks included a $2,069 PFD and a $1,200 rebate.

Dividend amounts are based on a five-year avereage of the Permanent Fund's investment earnings. This year's losses in the stock market, along with the loss of a profitable year in five year-average, led to the decrease.

Last year's amount was already set to be a record, but it was then supplemented by the $1,200 bonus added by the Legislature at the request of former Gov. Sarah Palin.

The extra amount was first called an "energy rebate," and was initially targeted by the Alaska Senate at helping Alaskans with high energy bills, often in rural areas. The House of Representatives made it a flat amount for everyone, and the name was changed to a "resource rebate."

The first dividends will go by direct deposit on Oct. 8 to those who signed up to receive the money in that manner; remaining checks will be mailed Oct. 22.

Three out of four Alaskans filed for their dividend online this year, but the state will try to prod even more to do so next year.

Starting next year, the Permanent Fund Dividend Division will not mail application booklets to Alaskans, but will instead make them available at distribution centers in most communities. In Juneau, that will be in the division office in the State Office Building and at the Legislative Information Office.

Internet applications will save the division money, and the cost of processing the applications and mailing the checks is subtracted from the amount available for the dividends.

The division is a state agency that processes applications and mails checks. It is separate from the Alaska Permanent Fund Corporation, which manages the fund.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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