Alaska News

This year’s PFD may be smaller, but it’s helping Alaskans pay the bills during COVID-19

Cal Austermuhl

Downtown Anchorage street musician Cal Austermuhl had good reason to be singing the blues Wednesday, the same day the state of Alaska began distributing $992 checks that will be paid to nearly every resident.

“Mine’s already spent,” he said of his Permanent Fund dividend. “It goes to outstanding bills.”

Austermuhl relies on performances at bars and markets and tips from summer tourists to supplement his income. But amid coronavirus concerns this year, that's a tough proposition.

As he sang a Jeff Healy Band ballad, a few people donning masks dropped dollars into his guitar case. Otherwise the streets were nearly empty after most cruise ship companies canceled their summer season, eliminating nearly half of the vacation plans for the 2.2 million tourists that annually visit Alaska.

The oil-wealth check, which some in Alaska see as an entitlement, typically is derived from the earnings of a nest-egg investment account the state has seeded with oil money. The fund was established during construction of the trans-Alaska pipeline in the 1970s.

This year's check was paid in part using a separate savings account.

Residents received the first check, $1,000, in 1982. Amounts have varied over the years, and traditionally were calculated on a five-year rolling average to buffer downturns in the economy.

This is the smallest check since $900 was paid in 2013. The biggest check was $2,072 in 2015. The following year, amid a budget deficit, then-Gov. Bill Walker reduced by roughly half the amount available for checks, leaving the rest in the fund's earnings in reserve.

Since then, the size of the check has been set by lawmakers, who in 2018 began using some of the fund's earnings to help pay government costs. Lawmakers also passed a law seeking to limit withdrawals from earnings, heightening tension between how much should be used on dividends and how much should go to state government as the deficit persists.

Some lawmakers worry that if the Legislature takes too much from the earnings reserve, it could imperil future dividends.

The size of the dividend has become a political issue. Checks this year would have been about $3,060 if the calculation had been followed.

"I think that sucks," James Grim said as he wiped down his red 1968 Pontiac Catalina convertible at an Anchorage car wash. "It wasn't set up for the government to get their hands on it. It was set up for the people of Alaska."

James Grim

Regardless of the check size, dividend day is a big one for Alaska retailers. “We direct deposited $512,474,838.56 today. Paper checks also went out, for a total payment amount of $592,360,237.82,” Anne Weske, the director of the Alaska Permanent Fund Dividend Division, said in an email to The Associated Press.

Some residents use the money for new toys, like big screen televisions or new snowmobiles, and others fund college savings accounts for children or donate to charities. Other residents, especially those in rural Alaska villages off the road system, use the money to pay high fuel bills or help supplement food items at grocery stores, where staples like milk can go for $10 a gallon.

The checks are normally distributed in early October, but this year Gov. Mike Dunleavy moved the distribution date up to help provide relief amid the economic fallout of the coronavirus. The dividend also comes a day after the expiration of a mandate from the Legislature that prevented automobile repossession and evictions for not paying rent.

"It's a nice little shot," said Mike Miller, a bartender at Flattop Pizza in downtown Anchorage. "I think it's cool that they decided to give it early this year, you know, because of what's going on."

Mike Miller

He was luckier than most, receiving extended unemployment benefits. His partner was an essential employee as a case manager at a women's shelter.

But now that he's back to work, the benefits are ending and there just aren't the customers around to make up that cash flow.

"The people just aren't downtown," he said noting that includes tourists and office employees still working from their homes.

“When the dividend checks come in, you know, everybody’s a thousandaire for a couple few days,” he said, standing in an empty restaurant during what would typically be the noon rush hour. “And a lot of time, like me, they’re going to go spend it at the bar. Fingers crossed, we get a little hit from that.”

Mark Thiessen, Associated Press

Mark Thiessen is a reporter for the Associated Press based in Anchorage.