I have known for some time that Alaskan residents are eligible to receive a check every year that they live there, somehow connected to the oil production of the state. After reading a bit about how the development of oil in Alaska began and developed, I somehow had the topic pop up and tweak my interest enough that I decided to do some more research into the topic.
First and foremost, the checks are dividends, payed out by the semi-independent Alaska Permanent Fund Corporation. The corporation was established to manage the Alaska Permanent Fund, which was established by a state vote in 1976 in response to the oil boom that had started on the North Slope region a few years prior. Part of the reason that the Fund is not completely state owned is that "Many citizens ...believed that the legislature too quickly and too inefficiently spent the $900 million bonus the state got in 1969 after leasing out the oil fields. This belief spurred a desire to put some oil revenues out of direct political control." So, with the money from the oil being put into the fund, some was being re-invested into various assets with safe returns, while a majority is "split between inflation-proofing, operating expenses, and the annual Permanent Fund Dividend." This dividend is not a constant value: it changes every year based on the current status of the Fund and how many people there are to distribute it amongst. However, it is distributed to everyone- absolutely everyone- living in the state, making it truly equal rights entitlement. Parents do have the position to control the check of their children, but a responsible parent could save it for something like their college education when they get older. Since the total payout to a single person since the Fund began distributing the dividends in 1982 would amount to $34,243. 41, that amount would be perfectly capable of paying for a sizable portion of higher education.
Besides the money put into the permanent fund every year, the oil returns to the state have allowed Alaska to eliminate most state taxes (petroleum is only un-eliminated tax; federal taxes still take effect), while also expanding public services. Granted, Alaska has a grand total of about 700,000 people living there, and many of them in non-urban areas, reducing the financial strain of sustaining public services- though many living in rural areas depend on government aid for monetary income. Also, with much of Alaska being relatively undeveloped, it doesn't have to spend as much on roads and electrical grids. With these considerations, it becomes easier to see how the Fund is currently valued at about $42.5 billion, despite the increased spending and reduced tax revenue. All of it is money intended for the current and future residents of the state to some degree or another, as a safeguard against the day that the oil reserves are depleted. And that will be a day of significant changes in the region, considering that the oil and gas industry in the region is both directly and indirectly connected to the employment of about a third of the state's work force.
The impact that the dividend has on the economy is varied. Some use it to settle finances, others use it as an opportunity to get something nice with money that isn't part of their standard budget. In some ways, it's similar to tax returns, except everyone gets the same amount. While I would debate calling it a "basic income guarantee," since it is a single payment once a year, it can make a difference in a local economy, especially if the average lifestyle is low- income subsistence living. However, the average Alaskan views it less as a sudden windfall of free money, and more like a paycheck after so many years. With the recent decrease in the value of the dividend, most will need to put more consideration into what they do with the money, especially if they intend to have it help them through the winter. The trend has been on the horizon, and with increased costs of living from an already expensive base cost (most supplies have to be shipped into the state, and gas is $6 a gallon there), the money may be better used by some in taking time away from the region during the harsh winter months.
Over the years, the dividend payouts, despite their regularly changing amounts, have played a role in the economy of the region. There has been some research done before into the role it plays in the economic landscape of the region, and while certain effects and personal impacts are noticeable, especially in communities that don't typically trade with a money economy, the effect gets washed out in regions that are more urbanized, and have concentrated populations. Although, some professions have had the dividend become a notable percentage of their income, meaning that it does provide a boon for the average worker. Meanwhile, sales outlets often capitalize on the dividend payout by holding sales, especially since the payouts come at the early start of the holiday shopping season. So, while the effect is mixed, that is probably for the best. If everyone did the same thing with the money, the economy of the region would probably be worse off.
So, while the source of the money is subject to some apprehension by some, the beneficial effect it has had in the far northern state is not. Even though the effect is mixed, and more felt by some than others, it has provided a boost to the region that has helped keep Alaska alive. It is only too bad that the rest of the country is mostly going into debt, instead of being able to generate enough surplus to enact a similar program with some other main resource. Perhaps if it had happened long ago in other states, they would have been able to reduce their modern day debt, though probably not to the extent that Alaska has managed. Oh well. No sense dwelling on "what ifs." The dividend provides an interesting economic environment in the state, and perhaps they will provide a template for something that will come later.
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