As $3,284 in dividends from the Permanent Fund hit bank accounts across Alaska, economists predict widespread impact
One of the largest dividend checks from the Alaska Permanent Fund to ever land in bank accounts landed on Tuesday.
The $3,284 payment, which includes a one-time $662 energy relief payment, comes as Alaskans face higher prices for everything from rent to fuel, and many in western Alaska are spending the weekend of the big storm begin to recover.
The annual payment, which comes from the Alaska Permanent Fund’s $73 billion in revenue, has been the subject of a grueling annual debate in the Legislature over how much of it should be paid directly to Alaskans and how much better for state ones Services such as education could be spent.
Experts say there aren’t many studies on how the money is being spent. However, they said the impact of this year’s total injection of $2.1 billion into the economy will be widely felt.
The size of this year’s check could feel like a “windfall” for many households and contribute to different spending patterns than in recent years, when the dividend was around $1,000, said Neal Fried, an economist with the Alaska Department of Labor and Social Affairs workforce development.
“I wouldn’t be surprised if people started spending a bigger chunk of it right away,” he said.
The size should free up money for spending on leisure items, such as dining or travel, more than in recent years, he said. It could also form the basis of large down payments — a family of five receives more than $16,000 — on items like a car or a house.
“Much need in many places”
Bill Popp, head of Anchorage Economic Development Corp., said the big check will definitely boost spending in stores, restaurants and other areas, including construction work on items like home remodeling and new appliances.
The cash injection into the economy could prolong pressure on inflation, he said. But the dividend overall should be a big win for consumers and business owners, he said.
“A lot of that money is going to be put to good use,” he said.
The expected surge in spending could also bring money to Alaskan communities through sales tax receipts, said Nolan Klouda of the Center for Economic Development at the University of Alaska.
Not Anchorage, which doesn’t have a sales tax, “but Fairbanks, Juneau, Mat-Su County and other local governments will benefit from higher retail spending,” Klouda said.
This year’s dividend will provide significant relief for many families, particularly low-income households, amid rising food, energy and rent prices, economists said.
“This money comes at a time of great need in many places in Alaska,” said Brett Watson of the Institute for Social and Economic Research at the University of Alaska in Anchorage.
The biggest household expense is often rent, typically more than a third of many budgets, he said. And it’s up in Alaska, particularly in Anchorage, where it’s up 14% over the past year.
People are also grappling with gas and fuel prices significantly higher than last year after Russia’s invasion of Ukraine disrupted global oil supplies.
In rural Alaska, gas prices are particularly high and anticipated winter heating bills are a big concern, said Nils Andreassen, head of the Alaska Municipal League. “That should help them,” he said.
[Fuel in the Alaska village of Noatak was $16 a gallon. The costs are more than just money.]
The money could make a big difference in many of western Alaska’s communities damaged by the recent storm and flooding caused by Typhoon Merbok. Federal aid may not be enough to help some residents, Andreassen said.
Increase savings for nonprofits and colleges
The dividend also helps donations to nonprofits, said Jessie Lavoie of the Alaska Community Foundation and host of Pick.Click.Give. Program. This year’s contributions to the program, at just over $3 million, are the third-highest in its nearly 15-year history, she said.
The program allows Alaskans to make donations to nonprofit groups. Nearly 24,000 people have given money to more than 640 groups this year, she said.
This year’s leading recipients include Alaska Public Media, Abused Women’s Aid in Crisis, Alaska Dog and Puppy Rescue and Bean’s Cafe.
The program typically brings in about $2.6 million a year, she said. “Being over $3 million is an achievement,” she said.
About 13,000 Alaskans have earmarked money for the Alaska 529 education savings program this year, a 2% dividend recipient ratio that’s similar to previous years, said Alaska 529 director Lael Oldmixon.
Investing in Alaska 529 offers tax-free withdrawals for post-secondary education expenses at US colleges, apprenticeships, and trade schools
On average, high school students have saved about $28,000 in the program by the time they’re ready to graduate, she said. That helps reduce the need for student loans or jobs while people are in college, she said.
High inflation and a poorly functioning stock market could explain why the contribution rate has not increased.
“It’s been an interesting year with rising inflation and the cost of oil and gas and I think that has had an impact on individuals,” she said. “And then there are those who are saving, and they’re still going to save no matter what.”
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