Alaska gives every resident $1,884 despite declining oil revenue

Supporters of an effort to repeal oil tax cuts approved by the Alaska Legislature in 2013 wave signs along an Anchorage street in August.
(Becky Bohrer / Associated Press)

An avalanche of free money strikes Alaska on Thursday as the oil-rich state government deposits $1,884 into the bank account of nearly every year-round resident.

The $1.1-billion payout is the third-largest since the Alaska government began using earnings from a rainy-day account, created by windfall oil revenue, to pay people for living here. The arrival of the money has become an annual holiday for families and retailers, part Christmas, part Black Friday.

“Very good news for people like us that sell impulse items,” said Fairbanks snow-machine dealer Craig Compeau, who peddles boats and motors and other necessities of Alaska life to dozens of remote villages across the state.


The cash arrives weeks after voters upheld a state oil tax plan that critics, including leading Alaska Democrats and former Republican governor and vice presidential nominee Sarah Palin, called a government giveaway to oil companies. Alaska has no state sales tax or income tax, relying mainly on declining oil revenue to pay for services such as state troopers and roads.

Republican Gov. Sean Parnell, a former oil industry lobbyist who took office when Palin quit in 2009, championed the tax plan. Parnell said the lower taxes would increase the oil production that was once so plentiful that it seeded the now-$51-billion Permanent Fund used to write strings-free checks to every eligible resident.

Parnell promised the tax plan would lead to more jobs and more oil money for Alaska while luring investment away from competing oil-producing states such as North Dakota. Shortly after the vote, BP Alaska announced it would cut 275 jobs in the state early next year because of the sale of the company’s interest in four North Slope oil fields.

Parnell said he “is not happy” about the jobs disappearing and would investigate. The vote to keep his tax break now leaves it up to oil companies to make good on their assertion that lower taxes would mean higher production, he said in an interview.

“Alaska is now competitive, by their own words, and they need to prove up,” Parnell said.

Parnell’s opponent in this year’s gubernatorial race, former Valdez Mayor Bill Walker, says the tax plan gives away the farm because it doesn’t require oil companies to tap new oil fields.


“It didn’t require oil companies to do anything specific,” said Walker, a former Republican who is running as an independent. “Didn’t require them to go after heavy oil, new oil or oil fields outside of Prudhoe Bay.... We just gave up a blanket discount.”

Walker on Sept. 2 announced he had teamed up with Byron Mallott, the Democratic candidate, in a “unity ticket” created to oust Parnell in November, with Mallott running for lieutenant governor.

A red state that leans Libertarian, Alaska has the highest rate of people receiving public assistance in the country, census records show.

A state agency invests earnings from the Permanent Fund in stocks, bonds and real estate. Profits from those investments are used to increase the size of the fund as well as write dividend checks to residents. A five-year average of the fund’s performance is used to calculate the amount.

This year’s payout is more than twice the $900 paid in 2013, because the recession of 2008 is no longer dragging the number down. Next year’s payout will probably be bigger, Parnell said.

Alaskans who have received every one of the 32 previous checks have pocketed the equivalent of $51,345 from the state, when adjusted for inflation, according to state records.

A total of 510,731 people will receive the money by direct deposit Thursday, and an additional 88,186 are waiting for checks in the mail. Only people who have lived in the state for two years are eligible.

This time of year, anyone with something to sell competes for a piece of the cash.

Alaska Airlines has launched a monthlong ticket sale. (“With your well-deserved Permanent Fund Dividend check, let the explorations begin.”) Craigslist entrepreneurs are ready to match the asking price of four-wheelers, Blue Danube dinnerware sets and saunas to the amount of the check.

Across the street from the offices of a minor league ice hockey team in downtown Anchorage, a hand-painted sign advertised “Use PFD Now!” outside Cornelius Auto on a recent Saturday. Already 20 to 30 customers had filtered through the one-room dealership, vowing to return when their dividend check arrives, said office assistant Danielle Porcher.

As she talked, a man walked into the strip mall to haggle over his bill for a 2003 Econoline van. Could he make a balloon payment on dividend day? he asked.

With oil production in decline, Holly Bell, who teaches economics at the University of Alaska, is one of many who have wondered whether the state ought to do away with the checks and save the earnings for the day that oil revenue runs dry.

Others have suggested using the earnings to pay for better government services. Neither are popular ideas; even suggesting them amounts to the Alaskan equivalent of political suicide.

“It becomes an entitlement, and like most entitlements it becomes difficult to get rid of,” Bell said. “If you’re a politician, this is a really good tool to get individuals in the state to continue to support your oil policies.”

Parnell’s Republican running mate, Anchorage Mayor Dan Sullivan, drew fire from Alaska Democrats when he suggested in a radio interview that the well-performing Permanent Fund earnings could one day be used to “fulfill government needs maybe in perpetuity.”

“That would be a beautiful thing,” Sullivan told Anchorage radio host Dan Fagan.

Parnell, under fire from opponents for deficit state spending plans, refused to cosign the idea.

“Forty-nine other states wish they had our reserves and financial challenges,” he said.

Hopkins is a special correspondent