'03 dividend totals $1,107

Juneau's Bill Hudson named to fund board

Posted: Thursday, September 25, 2003

The Alaska Permanent Fund dividend is $1,107.56, several hundred dollars less than last year, Gov. Frank Murkowski said Wednesday night.

Eligible Alaskans will receive $443.20 less than they did from last year's dividend of $1,540.76.

The amount of the 2002 dividend was announced at the annual meeting of the Permanent Fund Corp., which manages the $25 billion investment fund created from oil riches.

Dividends are calculated based on a five-year average of permanent fund investment income derived from bonds, stock dividends and sales and other investments.

Murkowski also announced he's backing a new way to calculate the amount of money available to legislators each year from the permanent fund.

Murkowski said he's supporting the "percent of market value" plan advocated by the fund's Board of Trustees.

"This provision would balance the good years against the bad and virtually guarantee that even in poor earning years dividends could still be paid, preventing a future Legislature from spending too much of the earnings," Murkowski said.

Murkowski also announced a new member of the fund board: Former state Rep. Bill Hudson, a Republican from Juneau.

Currently, the Legislature can spend only revenues derived from the fund's investments, which historically they have spent only to pay dividends. Past Legislatures returned the rest of the income to the fund, Murkowski said, and if they had not, the fund would be a third-smaller.

A proposed "percent of market value" plan would let lawmakers spend up to 5 percent of the fund's total value averaged over the previous five years. Such a change would require voter approval.

Supporters of the percent of market value plan say it would create a type of endowment that stabilizes dividend pay-outs that currently can be buffeted by swings in the stock market in the previous five years.

Murkowski noted that the fund board is confident in recommending the system because it's used by most private and public foundations.

A state House of Representatives committee is eyeing the percent of market value method as a way to free permanent fund money to pay for a part of state spending and close the state's chronic budget shortfalls.

Legislators could do so now but have been loath to use permanent fund money for state government, fearing political repercussions.

The Permanent Fund Board of Trustees has endorsed the percent of market value method, in part to ensure annual dividends, but has stopped short of recommending how the money be spent.

The fund ultimately finished the year with a gain of about 4.5 percent on investments, said spokeswoman Laura Achee.

Under the current system, dividends are expected to drop below $700 in two years before climbing above $2,000 in a decade.

Department of Revenue Commissioner Bill Corbus said an estimated 598,813 Alaskans will receive a dividend, up from 589,300 last year.

Direct deposit of dividends is scheduled for Oct. 8. Checks by mail will be sent starting Oct. 16, Corbus said.

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