The Alaska Permanent Fund. The highest payout was in the year 2000

[Joanne98]

Palin says SHE gave more of the money back to the people. Why is her payment less when the price of oil has gone up so much?

Annual individual payout (in nominal dollars):

Year Amount
2007 $1,654.00
2006 $1,106.96
2005 $845.76
2004 $919.84
2003 $1,107.56
2002 $1,540.76
2001 $1,850.28
2000 $1,963.86
1999 $1,769.84
1998 $1,540.88
1997 $1,296.54
1996 $1,130.68
1995 $990.30
1994 $983.90
1993 $949.46
1992 $915.84
1991 $931.34
1990 $952.63
1989 $873.16
1988 $826.93
1987 $708.19
1986 $556.26
1985 $404.00
1984 $331.29
1983 $386.15
1982 $1,000.00

Alaska Permanent Fund
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The Alaska Permanent Fund is a constitutionally established fund, managed by a semi-independent corporation, established by Alaska in 1976. Shortly after the oil from Alaska’s North Slope began flowing to market through the Trans-Alaska Pipeline System, the Permanent Fund was created by an amendment to the constitution of the U.S. state of Alaska to be an investment for at least 25% of proceeds from some minerals sale or royalties. The Fund does not include either property taxes on oil company property nor income tax from oil corporations, so the minimum 25% deposit is closer to 11% if those sources were also considered. The Alaska Permanent Fund sets aside a certain share of oil revenues to continue benefiting current and all future generations of Alaskans. Many citizens also believed that the legislature too quickly and too inefficiently spent the $900 million bonus the state got in 1969 after leasing out the oil fields. This belief spurred a desire to put some oil revenues out of direct political control.

The Alaska Permanent Fund Corporation manages the assets of both the Permanent Fund and other state investments, but spending Fund income is up to the Legislature. The Corporation is to manage for maximum prudent return, and not--as some Alaskans at first wanted--as a development bank for in-state projects. The Fund grew from an initial investment of $734,000 in 1977 to the current sum of approximately forty billion dollars as of July 13, 2007. Some growth was due to good management, some to inflationary re-investment, and some via legislative decisions to deposit extra income during boom years. Each year, the fund's realized earnings are split between inflation-proofing, operating expenses, and the annual Permanent Fund Dividend.

Permanent Fund Dividend
The Permanent Fund Dividend is a program benefiting Alaskans without a felony conviction who have resided in the state for at least one calendar year preceding the date applied for a dividend and intend to remain an Alaska resident indefinitely at the time applied for a dividend. The amount of each payment is based upon a five-year average of the Permanent Fund's performance and varies widely depending on the stock market and many other factors.

Though the payouts have varied from the smallest ($331.29 per person in 1984) and the largest ($1,963.86 per person in 2000), they usually vary between $600 and $1,500 ($900 and $1,800 when adjusted for 2005 dollars). Although the principal or corpus of the Fund is constitutionally protected, income earned by the Fund, like nearly all State income, is constitutionally defined as general fund money .

The first dividend plan would have paid Alaskans $50 for each year of residency up to 20 years, but the U.S. Supreme Court in Zobel v. Williams disapproved the $50 per year formula as an invidious distinction burdening interstate travel. As a result, each qualified resident now receives the same annual amount, regardless of age or years of residency. In effect, this equal-amount aspect mathematically means a greater percentage of added income for people of lower incomes. Conversely, any cut, limit, cap, or end of the equal-amount PFD would mean low-income Alaskans would experience the greatest percentage loss of income. The PFD payout-about October of each year--is acknowledged to have a substantial effect on Alaska's economy, both in total and especially in rural Alaska where unemployment can reach 60% and where cash is scarce.

Constitutional Budget Reserve (CBR)
The Constitutional Budget Reserve is a companion fund to the Permanent Fund which was established in 1980 to deal with the problem of short-term oil revenue variability. Deposits into the CBR consist of settlements of back taxes and other revenues owed to the state. Draws from the CBR into the general fund require a 3/4 vote of each house of the legislature and must be repaid. To date, the general fund has amassed a debt of approximately $4 billion to the CBR in order to maintain a stable level of public spending.

Issues with the Constitutional Budget Reserve

The size of the debt as related to that of the budget has spawned doubt over the probability of eventual repayment. The CBR is based on the assumption that the general fund deficit will remain constant over time (allowing paybacks to balance draws). Believing this to be mistaken, critics allege the state uses resources from the CBR to avoid reducing the budget, acknowledging debt, or increasing taxes. According to them, falling oil revenues and growing spending requirements will leave paybacks consistently lower than draws, causing the CBR to fail.

Former state senator Dave Donley (R-Anchorage) recognized that the high vote requirement to spend CBR money (3/4 of each house) had a perverse and unintended consequence, The high vote requirement was meant to insure that draws from the CBR would be rare, but in fact such draws are common. Donley explained that the high vote requirement really empowers the minority party , who can then get what they want in a 'Christmas tree bill' in exchange for their votes . Donley thus explains why both parties can and do use the higher voting rule requirement to MORE frequently spend from the CBR.


Issues with the Permanent Fund
Dividends and Spending

While the Permanent Fund generally generated large surpluses even after payment of the Dividend , the state general fund operated at a substantial deficit. However, the consolidated account of both General and Permanent Funds usually shows a surplus. The Funds' ultimate uses were never clearly spelled out at its inception, leaving no current consensus over what role Fund earning should play in the current and expected state budget shortfalls. However, some people argue that the original intent was to fund state government after the temporary oil riches ceased, while others note that the Fund's intent changed from its 1976 origin when in 1982 the Dividend program began. Public opinion strongly favors the Dividend program. Indeed, in 1999, with oil prices going as low as $9 per barrel and Alaska's oil consultant Daniel Yergin forecasting low prices "for the foreseeable future", the State put an advisory vote before Alaskans, asking if government could spend "some" part of Permanent Fund earning for government purposes. Gov. Knowles, Lt. Gov. Ulmer, and many other elected officials urged a yes'vote. Campaign spending greatly favored the "Yes" side. The public voted "No" by nearly 84%. . Many Alaskans now think of it as a "permanent dividend fund,' much to the dismay of 'original intent' advocates. Perceived support of the dividend program is so universally strong that it ensures the dividend's continuity and the protection of the Fund's principal, since any measure characterized as negatively impacting dividend payouts represents a loss to the entire populace. That is, legislators willing to appropriate the Fund's annual earnings are constrained by the politically suicidal nature of any decrease in the public's dividend.

Percent of Market Value (POMV) Proposal

Some officials c. 2003? proposed changing the Permanent Fund's management system to a Percent of Market Value (PoMV) approach which would require an amendment to the state constitution. The PoMV proposal would allow the state to withdraw up to five percent of the fund's value each year to use for the dividend program and government spending. Tentative, unapproved proposals indicate that half of this five percent withdrawal would go to each purpose---but POMV died in the Legislature because most there saw POMV as unambiguously tied to such politically unpopular spending proposals. Most Alaskans <84% in 1999> disapprove of allowing the government to tamper with the fund, especially if that means government might spend Fund income.


http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

[Minimus]

1. This made me think of The Simpson's Movie -

when they go to live in Alaska and Homer is given $1000 as they enter the state. The line is something like -we pay our citizens for allowing us to destroy the beauty of our state.

Homer grabs the cash and says WooHoo!

[Kindigger]

2. The guy that wrote that episode

must have stopped at the first rest stop in AK after leaving the Yukon.

I was so disgusted I took a picture. With all the dirty disposable diapers lying around, I'm still trying to figure out if the Alaskan babies knew they all had to poop before entering Canada, or if they held it until they got back home.:shrug:

[Joanne98]

3. The people in Philadelphia are trying to tax properties owned by the Alaska Oil Fund.

Charlie's Challenge and the PrudentInvestor Rule

Let's call this dilemma "Charlie'sChallenge." Imagine now that Jennifer has given Uncle Charlie some of her valuable coins to invest in the best and safest way possible. Jennifer trusts Uncle Charlie to do a good job because he is an expert investor. Charlie invests in a diversified portfolio of stocks, bonds and other securities, including real estate. Having carefully explored potentially good deals for real estate investments in "the lower 48", Charlie selects several properties, including one in the City of Philadelphia. Philadelphia has low property taxes, state and federal monies pouring into the city and "free enterprise zones" so land values will surely be rising. Real estate in this city looks like a good investment for Jennifer.

However, unbeknownst to Charlie, there is a growing citizens movement in Philadelphia that is set on capturing for the people of that city the equivalent of Alaska's oil wealth - the value accruing to a different type of valuable natural resource - the surface land sites of Philadelphia. Charlie's Challenge is this: when he becomes aware that the citizens movement for land value taxation in Philadelphia will cut into profits for Jennifer's dividend investment fund, what will he do? Will he try to keep the resource rents of Philadelphia flowing into Jennifer's portfolio or might he decide to help the citizens of Philadelphia establish their claim to the resource rents of their own territory? Or will he simply withdraw funds from real estate investments that may not be so profitable once land values are recaptured by the city for the benefit of its citizenry?

Charlie's Challenge is quite literally the situation that is emerging for the Alaska Permanent Fund Corporation and its Board of Trustees. The Fund now owns investment property in the city of Philadephia. There is indeed a growing citizen movement in that city to shift taxes onto the value of land sites, thereby recapturing resource rents as a common heritage right for the citizens of the territory of this municipality. Keep in mind that the Fund is now so enormous ($26 billion) that it has the power to grab significant amounts of resource rents from anywhere on earth. Within established foundation guidelines of the "prudent investor rule" the Trustees' goal is to earn slightly better-than-average rates of return with slightly below-average levels of risk. In other words, the Fund is managed under normal investment procedures and criteria. And under normal investment rules, there are no established ethical criteria for socially responsible investing. In fact, the Fund makes a special point that it minimizes risk and within that constraint maximizes investment yield and does NOT engage in "social" or "political" investing.

http://www.progress.org/cg/alaska03.htm