Alaskans digest effects of smaller PFD

  • By STEPHANIE PROKOP
  • Saturday, October 1, 2016 7:23pm
  • News

Local retailers are expected to receive a boost when the dividend is distributed on Oct. 6, but not as big a boost compared to previous years.

While a lawsuit contesting the amount of this year’s dividend continues in the courts, Permanent Fund distributions will be sent out to eligible residents on Oct. 6. What was going to be a $2,052 check is now $1,022, after Gov. Bill Walker partially vetoed this year’s appropriations bill and authorized $695 million to be transferred from the Alaska Permanent Fund Corporation instead of $1.3 billion.

In response, a group on Facebook has formed “Alaskans Against Gov. Walker’s PFD Theft” and has so far attracted close to 12,000 members in less than a dozen days. A protest was planned for Saturday outside the Wendy Williamson Auditorium in Anchorage where Walker was scheduled to speak.

Members represent every area of the state, and have voiced concerns about not being able to meet energy bills, renew car leases, and purchase snow tires due to the dividend which has been cut in half.

According to messages on the group’s public wall, members are hoping to receive publicity from the media at the protest. It is not clear, however, how the event was being publicized, outside of social media sharing.

The Alaska Journal reached out to group moderators. Cameron Cowles of Anchorage told the Journal, via Facebook, that he recently joined to “help get Alaskans’ voices heard on the matter of the PFD.” Cowles serves as co-administrator along with Brandi Wadkins and Cameron Bush of Eagle River, who originated the group.

The budget gap — whether Alaska should rely on a volatile commodity or implement a stable tax system — has been debated since the days of Gov. Jay Hammond, who oversaw the creation of the Permanent Fund in the late 1970s.

Annual dividend payouts have been as high as $2,072 (2015) and as low as $331 (1984).

“This year’s $1,022 dividend is actually pretty close to the historical average of $1,100 since the program’s inception,” wrote Abigail Enghirst via e-mail.

Enghirst is the Special Assistant in the Office of the Commissioner for the Department of Commerce, Community and Economic Development.

The department does not track economic data on the PFD, she noted. So the Journal turned to Gunnar Knapp, who lives in Anchorage and recently retired from the Institute of Social and Economic Research. He is now Professor Emeritus of Economics at the University of Alaska Anchorage.

“The PFD is a significant boost to Alaskans’ income. In turn we all have more money to spend, and we spend a lot at local businesses,” he said, explaining that a smaller portion will purchase items online, take vacations, save for college tuition or pay off that credit card.

What makes the dividend a distinct source of income is that it arrives all at once.

“It’s different than the usual paycheck which quickly gets used to pay rent, buy groceries,” he said.

Generally, one will use income on what is most essential. Millionaires might buy a second luxury car or perhaps a yacht, but for everyone else, even if one is in absolute poverty, the first bit of income goes towards food, diapers, medicine, whatever you most have to have, along with basic rent and so on, he said.

Because the dividend offers a lump sum, for many, this is a way to make big purchases, car down payments, buy snow machines, etc.

“I do not buy more cereal because I received a dividend check, but I might buy a nicer TV set,” he said.

This is why retailers love the dividend: its significant purchasing power. When there is less received, Knapp expects a correlation in less spending at local businesses.

“But it may not be in some obvious way, and it does not apply to everyone,” he said. Someone planning to save, for example, has no bearing on the neighborhood furniture store. However, when the dividends do come out, sectors such as automotive, sales, electronics, furniture, restaurants, etc. are going to see a boost in activity, but not as big as in previous years, he said.

Furthermore, when someone says, that stinks, $1,000 is disappearing from the local economy, Knapp offers this advice: “Keep in mind that the money has been saved by the state and does not mean it will not show up in the economy later.”

“We are taking the hit this year in lieu of a future hit,” he said. “That is not any consolation to businesses this year nor is it any consolation to a family of four that is receiving $4,000 less. That hurts. God, that hurts.”

It’s possible though, he said, that as a result of a lower PFD this year, the family won’t be receiving a $4,000 higher tax bill in the future, or their kids are not going to have more classmates because school budgets are cut, or the neighborhood will not be packed in snow because services were reduced. “I’m not saying you should like this, but we can’t see it as a total loss to the economy, it’s a shift.”

Stephanie Prokop can be reached at stephanie.prokop@alaskajournal.com.

More in News

A map shows the location of a safety corridor project along the Sterling Highway between Sterling and Soldotna. (Photo courtesy of DOT&PF)
Sterling highway project to have limited environmental impact, assessment finds

The stretch highway to be improved reaches from Fred Meyer in Soldotna to the bridge over Moose River in Sterling

Donated blood is prepared for storage and eventual transport at the Blood Bank of Alaska’s Juneau location. There is a statewide shortage of donated blood. (Ben Hohenstatt / Juneau Empire)
‘National blood crisis’ presents challenges in Alaska

Donation centers contend with COVID, weather and other disruptions as they work to stock hospitals.

Senate Majority Leader Chuck Schumer, D-N.Y., speaks to reporters alongside, from left, Sen. Raphael Warnock, D-Ga., Sen. Cory Booker, D-N.J., Sen. Amy Klobuchar, D-Minn., and Sen. Alex Padilla, D-Calif., during a press conference regarding the Democratic party’s shift to focus on voting rights at the Capitol in Washington, Tuesday, Jan. 18, 2022. (AP Photo/Amanda Andrade-Rhoades)
Big voting bill faces defeat as 2 Dems won’t stop filibuster

This is the fifth time the Senate will try to pass voting legislation this Congress

Members of the Kenai and Soldotna chambers of commerce listen to a briefing by Alaska Sen. Dan Sullivan during a joint luncheon at the Soldotna Sports Complex on Tuesday, Jan. 18, 2022. (Camille Botello/Peninsula Clarion)
Sullivan reports in from D.C.

The senator touched on infrastructure, voting rights, defense spending and the pandemic

The Alaska State Capitol building seen on Monday, Jan. 10, 2022 in Juneau, Alaska. (Peter Segall / Juneau Empire)
State lawmakers face proposed salary hike, allowance limits

A commission voted 3-1 to raise the base salary from $50,400 a year to $64,000

Peter Segall / Juneau Empire
House Speaker Louise Stutes, R-Kodiak, gave a stern warning about decorum to members of the Alaska House of Representatives on the first day of the legislative session on Tuesday, Jan 18, 2022. Last year the Legislature was so divided it took a full regular session and four special sessions before work was completed.
1st day of session brings familiar tensions to Legislature

The session opened with calls for bipartisanship, but tensions were evident

Image via Alaska Board of Fisheries
Statewide shellfish meeting rescheduled

This comes after the board bumped back its Southeast and Yakutat shellfish meeting

A State of Alaska epidemiology bulletin can be found at https://dhss.alaska.gov/dph/Epi/pages/default.aspx.
State updates STI protocol after reported drop

The state has been experiencing an outbreak since 2017

The Kenai Fire Department headquarters are photographed on Feb. 13, 2018, in Kenai, Alaska. (Peninsula Clarion file)
Police identify remains found in burned car

Kenai Police and Fire departments responded to a car fire at Beaver Creek in Kenai on Jan. 7

Most Read