Share this story
Close X
Switch to Desktop Site

Why Alaska is passing out $1,000 checks

Everyone knows the story. Alaska last week began mailing $1,000 checks to its citizens in an unprecedented ''share the oil wealth'' program.

But the Governor isn't entirely happy - even though he thought up the idea.

About these ads

Gov. Jay S. Hammond says a ruling by the United States Supreme Court forced him to accept a hybrid version of the plan.

Mr. Hammond says his original approach would ''far better have . . . helped curb government spending, created collective public concern for prudence and pace of resource development, . . . helped stabilize our population, . . . '' and ''permitted the elimination of a multitude of . . . programs the government now spends money on at the behest of one special interest or another.''

On June 14 the US Supreme Court struck down the Hammond-originated Permanent Fund dividend program that required one year's residency for eligibility and based the size of dividends on the number of years since 1959 that one had lived in Alaska.

On June 16 the governor signed a ''backstop'' bill providing 1982 payments of subsequent years will vary because the $1,000 represents funds accumulated since 1978, when the suit finally decided by the high court originated.

Governor Hammond, a Republican whose second four-year term ends this December , said the court ruling was ''far and away the greatest disappointment to me in my almost 20 years in political office.''

However, he says the substitute law has solid public-policy benefits. It will , he adds, ''finally allow all Alaskans to receive an equitable portion of the earnings of their oil wealth. Although that share will not be allocated as appropriately as it might have been, the size of that share will be directly tied to the prudence with which we add to the Permanent Fund and invest it.''

Mr. Hammond says the original plan ''could have helped stablize our population by permitting 'old-timers' to remain here rather than leave because of inadequate retirment funds to meet Alaska's high cost of living.'' It ''better recognized that a portion of the oil wealth belonged to Alaskans themselves,'' as opposed to the government, and it gave greater rewards to ''those to whom it had 'belonged' for longer periods,'' he argues.

About these ads

The citizen dividends are not paid directly from oil revenues. The Legislature, with the governor's concurrence, allocates a major part of the state's oil income to the Permanent Fund. Dividends from the investment of that fund - which currently contains $3 billion, and presumably will continue to grow - will be distributed on an annual basis. Because of the oil wealth, Alaska residents also do not have to pay a state income or sales tax.

In the last two years oil revenue has dropped because of the world oil glut and conservation in the other 49 states. Recent events, including an increase in spot-market oil prices, indicate at least a slight upturn, says a source in Juneau. Current projections for Permanent Fund dividends for each resident are about $350 in 1983 and $250 in 1984.

Governor Hammond says the Fund provides ''a powerful incentive for the people to demand that government save some of their oil wealth rather than simply put every dollar of it into ever-expanding government programs'' for special interests, sometimes at the expense of Alaskans who do not benefit.

Also, he says, the fund should permit government to ''cut down on its spending in nontraditional areas and place the opportunity and responsiblity of making such spending decisions back on the public.''

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.