PFD economic impact.

• Author: Bohi, Heidi
• Position: ECONOMY - Permanent Fund Dividend

Free money. There are economists and financial analysts who will tell you that, of course, there's no such thing. But they'd be hard pressed to convince any Alaskan who's ever received the annual Alaska Permanent Fund Dividend (PFD) check of that. Every September when the governor announces how much the annual payment is going to be for every man, woman and child who qualifies, everyone shares that twinge of happiness that comes from knowing they're getting something for doing absolutely nothing.

"Isn't Alaska the state where everyone gets paid just to live there?" Outsiders ask this question as if every year each Alaskan gets to stand in a money booth and grab as much as they can until the fan quits blowing.

MINI ECONOMIC BOOM

But in the grand scheme of things, when you consider the impact on personal income, the PFD is not really that much money. Last year, Gov. Sean Parnell announced the 2009 check was going to be $1,305. That was modest in comparison to former Gov. Sarah Palin's announcement in 2008--$2,069, plus a one-time $1,200 Alaska Resource Rebate tacked on--making the annual cash influx higher than ever that year.

For the past 29 years the payment has gone up and down based on the five-year average of the fund's performance, varying widely depending on the stock market and other factors that influence the fund portfolio. Checks usually vary between $600 and $1,500, or $900 and $1,800 when adjusted for inflation.

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When the PFD begins to hit banks and financial institutions in early October, whether it's spent on a luxury item, or it goes to a family pot that will be used for bigger purchases or paying household bills, the consumer impact on Alaska's economy is nothing short of a mini economic boom. Spending generated by PFD automatic deposits starts to be felt in every cash register in every corner of the state.

In 2009, $875 million was calculated for transfer from the fund to the State Revenue Department Permanent Fund Dividend Division, and after $55 million in adjustments for residual funds, designated State expenses and the cost of operating the PFD, $820 million was available for payout to the 628,499 successful applicants.

The fund is invested primarily in stocks, bonds and real estate. In addition to the money it makes from these investments, the Alaska Constitution requires 25 percent of all mineral royalties received be deposited into the fund, along with 50 percent of royalties from certain...