Record dividend size brings new garnishments

Some Alaska residents are upset about claims taking a cut of their $1,200 energy rebate checks

Posted: Thursday, October 09, 2008

The Alaska Permanent Fund dividend windfall, boosted by the Legislature to a record-high $3,269 this year, is having some unanticipated consequences.

Michael Penn / Juneau Empire
Michael Penn / Juneau Empire

For some children, those will be good changes: Millions of dollars in uncollected child support is among the claims on this year's dividend checks.

At the same time, the beefed up checks are also spurring more garnishment attempts, as well as calls from residents upset about their dividend being grabbed by someone to whom they own money.

Disabled Juneau logger James Murray said he's not so much upset about having his dividend go to child support, but he's angry about losing the extra $1,200 rebate the Legislature added to this year's check at the request of Gov. Sarah Palin.

"The dividend, I signed that over (to child support) but the energy rebate, I need that to buy fuel," Murray said.

Permanent Fund Division director Debbie Bitney said that's greatly increasing work for her staff.

"It's definitely increasing the amount of garnishments, and the person who is garnished usually contacts the division for information," she said.

That's despite the fact that the division doesn't have the authority to release the garnishment, Bitney said.

The Permanent Fund Dividend Division is not part of the Alaska Permanent Fund Corp., which manages the state's $31 billion permanent fund. Instead, it is part of the Department of Revenue responsible for processing applications and paying the dividends.

What got Murray peeved is the Alaska Legislature. When the rebate was first proposed by Palin it was to be an "energy" rebate, aimed at helping Alaskans cope with the state's high cost of fuel. Anyone in the state for at least six months would have been eligible, and a separate bureaucracy would have been set up to process the rebate, at a cost of half a million dollars.

The Legislature decided, however, to change the "energy" rebate to a "resource" rebate.

During the legislative battles, the Senate hoped to provide most of the rebate through lower energy prices, which would have provided extra help to Bush and rural communities hard-hit by heating oil and gas prices.

The House of Representatives, though, led by Southcentral Republicans, preferred an equal cash payment to everyone. Changing the name to a "resource" rebate meant the $1,200 was not linked to actual energy costs.

It was not clear whether lower energy prices would have been considered taxable income, said Department of Revenue officials, but increasing the size of the dividend made it clear that it was taxable.

"We knew that was going to happen, and that was one of the reasons we supported the Senate plan," said Rep. Beth Kerttula, D-Juneau, and House Minority Leader.

The Senate rebate plan, also supported by Sen. Kim Elton, D-Juneau, would have reduced heating oil costs, but also had subsidies for electric users in Juneau and natural gas users in Anchorage.

Murray said he blames the Legislature for not getting the money to those who really needed it.

"My Legislature failed me," he said.

That's something Murray said he's used to with the government.

"Ever since I went to Vietnam, they've been screwing me," he said.

He's pursuing legal action, questioning whether the division had the legal authority to determine if the rebate should have been included in the garnishment order.

Legislative staff say the number of complaints to their offices this year has soared, likely due to the size of the dividends.

Another of those concerns has been from foster parents who don't have access to their foster children's dividends, but are faced with rising heating bills.

Foster children's dividends are kept in a trust account until they "age out" of foster care, usually at age 18, said Jon Sherwood of the Department of Health and Social Services.

The department is also reviewing foster care reimbursement rates in recognition of rising prices, he said.

• Contact reporter Pat Forgey at 523-2250 or e-mail

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