JUNEAU, Alaska (AP) — A truck unexpectedly arrived at Allyssa Canoy’s house in Fairbanks, delivering much-needed heating fuel for the cold winter months ahead. However, along with the fuel came a hefty bill of $2,600. Canoy and her two sons are set to receive checks that will cover this expense and still leave some funds available for other needs.
Starting Thursday, Alaska is set to distribute its annual dividend to residents, sourced from the state’s substantial $83 billion oil wealth fund. This dividend acts as a type of bonus for Alaskans to acknowledge their residency. For many, this payout is a nice financial cushion for additional spending, such as purchasing new tires or taking a vacation to escape the long winter. For others, it serves as an essential supplement to help manage the high living costs prevalent in the state, including internet services, gas, and groceries.
This year's payout will amount to $1,000 per person, which is the lowest dividend since 2020, when residents received $992. The payout has dropped below the $1,000 mark only twice since 2006. There used to be a defined formula to calculate the dividend based on the fund's market performance, but lawmakers have since deemed that formula too costly and have largely abandoned it over the past decade.
Currently, politicians decide the dividend amount, and it becomes a contentious issue during budget negotiations. Lawmakers balance the size of the checks against other pressing state needs, such as funding for education. Since 2018, they have also allocated earnings from the fund, traditionally reserved for dividends, to help stabilize the budget. This year, $1,000 was deemed the most feasible amount while also increasing K-12 education funding and limiting withdrawals from the state’s savings.
Had the previous formula been utilized, residents would have each received approximately $3,800. The Alaska Permanent Fund itself is nearly 50 years old, established by voters in 1976 during the early oil boom. The fund was created to save a portion of Alaska’s mineral wealth, which has grown substantially through investments. While the principal of the fund is constitutionally protected, its earnings are available for expenditure.
Since the first dividends were paid in 1982, proponents have viewed them as a way to ensure that Alaskans maintain a vested interest in the Permanent Fund. This year, more than 600,000 of Alaska’s roughly 740,000 residents qualify for the dividend, with eligibility contingent on meeting residency and other specific requirements. In addition to their regular dividends, Alaskans have also received an energy relief payment for the past three years, including last year.
The use of the dividend money varies widely among Alaskans. Some view it as an opportunity for discretionary spending, placing it into college funds, savings accounts, or donating to charities. Others find themselves relying on this financial support for essential purchases, such as heating oil, winter tires, or snow machines, which are crucial for transportation in rural areas where hunting and trapping remain vital for subsistence.
Canoy, a single mother selling her home, intended to use her family's share of the dividend for different projects. However, because the fuel truck arrived early, she now has to allocate that money towards covering the unexpected fuel bill instead. Despite this, she plans to allow her sons to spend the remaining $400. While she feels comfortable financially and views the dividend positively, she hopes for a more systematic approach in setting these amounts, emphasizing the need for sustained assurance that residents are receiving fair benefits from the Permanent Fund.
