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Loss of dividend would threaten the survival of rural Alaska

Many Alaskans get by on so little money that the loss of the Permanent Fund dividend could fundamentally affect how they feed themselves.

According to a new study led by Gunnar Knapp, director of the Institute of Social and Economic Research at the University of Alaska Anchorage, a 10th of Alaska's households get by on an average of under $14,000 a year. That's 30,000 households representing almost 90,000 people.

ISER professor Matt Berman, who prepared that part of the study, said the figures, covering 2013, come from census data verified by information from the IRS. They include all the cash that families received, including government benefits, but not food aid, energy subsidies and nonfinancial income.

How do you support a family on so little money? Many of these families live off the land, in rural communities on the road system or, more commonly, in Native villages.

The village economy is reflected in the Kusilvak Census Area (formerly Wade Hampton), a Southwest Alaska unit that has no hub town, just traditional villages. Incomes there are the fourth lowest of any county-equivalent in the United States, according to an online compilation of census information.

I called Roderick Phillip, whom I had spoken to previously about the impact of climate change on his subsistence lifestyle, and reached him in Kongiganak, a Yup'ik village of about 400 people southwest of Bethel. (It is not in Kusilvak, but has a similar profile.)

Phillip works seasonally operating heavy equipment and receives a small amount of money serving on boards, including one that oversees a wind energy project. But 80 percent of his family's food comes from hunting, fishing and gathering.

Phillip and his family hunt for walruses, beluga whales, seals, caribou, moose and many other mammals, as well as geese, ducks, swans and cranes. They gather eggs in the spring and they fish in the summer for salmon, halibut and various other species. They also pick berries and gather edible plants.

Philips speaks slowly and with great precision, so it took a while to list all his food sources and how he harvests them. I already knew, from visits with other subsistence families, that obtaining and processing enough wild food to feed a family is a challenging and highly skilled set of full-time jobs.

When I asked whom he supports with subsistence, the discussion took even longer. His own nuclear family, with his wife, son and daughter at home, an older son, his in-laws and parents, various other family members, and elders in the village.

And then, he said, "The entire community." When he catches a moose, he shares half with everyone.

The last time Phillip bought gas, the price was over $5.80 a gallon. Many hunting trips require long trips. Snowmachines, outboard motors and ATVs break down and need parts. Every year, it seems, one of them needs to be replaced.

That's where the dividend goes. But it feeds a lot of people.

From Juneau, we hear the Legislature is more inclined to reduce the dividend than to impose an income tax.

Based on the ISER study, taking $1,000 out of the dividend would reduce the income of the lowest 30,000 households by 21 percent, on average. It would take less than a single percent from the highest 30,000 households.

Raising the same amount of money with a progressive income tax would take about 3 percent from the highest earners and virtually nothing from the lowest.

This is grossly unfair.

(Also, an income tax would capture 7 percent of the money from nonresidents and another 11 percent from the IRS, through federal tax deductions.)

But budget cuts would hurt low-income Alaskans too. Rep. Bob Herron, D-Bethel, whose district includes Kongiganak, said he joined a coalition led by Republicans partly to protect the Power Cost Equalization program, which lowers astronomical utility costs in rural Alaska.

Urban Alaskans already got our share of subsidized energy. The state invested heavily in hydroelectric dams and power lines that, if we had to pay their full cost in rates, would increase our bills.

In my next column, I'll address the varying economic and regional impact of each of the fiscal options.

Herron said, and I agree, that a dividend cut is inevitable and necessary to prevent a future budget collapse that eliminates the entire dividend.

Besides, I don't want the dividend to grow forever. At some point, it stops being a basic income support and becomes an income.

When dividends peaked in the late '90s, the family of Robert Hale, better known as Papa Pilgrim, came to Alaska and collected 17 checks, allowing him to buy land and live a warped frontier fantasy. If the dividend grows by thousands, Alaska might import many big families with little means of support.

Setting the dividend at a stable level, perhaps at the 10-year average of about $1,300, would maintain its purpose as a protection of the Alaska Permanent Fund, would help low-income families, and would leave money to support the state.

If the dividend goes away completely, living off the land would be much more difficult, said Gene Peltola Sr., executive director of Orutsaramiut Native Council, the tribal organization in Bethel.

He said, "They're going to be totally in a survival mode. I hate to think what would happen."

Peltola said more families would move to Bethel. They're already doing that, but can't find jobs.

Herron said more people would have to live on government benefits — mailbox money.

Gov. Jay Hammond created the dividend to distribute money he believed belonged to Alaskans, especially rural Natives.

Alaska was theirs first. I think a dividend to sustain the traditional way of life is a small measure of justice.

But when I talked to Roderick Phillip, he was more concerned about the climate. With so little snow, he hasn't been able to hunt caribou in three years. He called that "a disaster."

As to losing the dividend — as much as he needs it, he wouldn't play the victim. He said, "We would survive like always."

Charles Wohlforth's column appears three times weekly.