In Alaska, a push to curb perk for citizens

Forget the mountains, glaciers, wild animals, and shimmering northern lights. For many people, the most beautiful thing in Alaska is a check the state sends to citizens every year.

It doesn't matter whether they're bankers or unemployed, lifetime residents or newborns - everyone gets the same amount. This year's check, handed out in October, is expected to total about $1,000. The payment - derived from investment earnings on the state's oil wealth - is so popular that some economists have proposed a similar fund for Iraq.

But now, in its 25th year, some Alaskan politicians argue that the $34 billion Permanent Fund is too generous. So they're moving to cut off thousands of people for whom Alaska is more their state of mind than their state of residency. Among those threatened: Alaska students who go off to college and start new lives elsewhere, military personnel and dependents transferred permanently out of state, and religious missionaries who depart for new frontiers.

"A huge percentage of people are never ever coming back to Alaska," says state Rep. Bruce Weyhrauch, a Juneau Republican who has sponsored a bill that would delay payment of dividends to absentee Alaskans until their return. The bill has 18 cosponsors, representing nearly half of the state House.

"The people who live here, they just think it's the greatest idea ever" to restrict payouts, Mr. Weyhrauch says. "The people who've been transferred out think it's antipatriotic."

Since its inception in 1982, the dividend has woven its way into Alaska life. Courts use lists of dividend recipients to draw up jury pools. The state uses them to check corporations' records in giving Alaskans the first crack at job openings.

In its early years, the dividend was seen as a windfall, but now it is treated more as ordinary income, Alaska economists say.

"We just expect to have it in our bank accounts every year," says Neal Fried, an economist with Alaska's Department of Labor and Workforce Development.

Even the dividend promotions that used to grip auto dealerships, airlines, and other sellers of big-ticket items have lost much of their luster, he says. "You don't even have to show them your check anymore."

The fund, created by a 1976 constitutional amendment that directed a portion of the state's petroleum royalty earnings into the new account, was established as North Slope oil was about to start flowing down the trans-Alaska pipeline. The plan was to plow the royalties into a portfolio of bonds and eventually stocks and real-estate investments, essentially converting Alaska's finite wealth into a renewable source of wealth.

Longtime residents explain that the dividend is not a gift from oil companies or the government, but a deserved payment to the public for oil extraction in a state where individuals are barred from owning mineral rights.

"Alaska's kind of a unique situation because this way, everybody gets their share," says Al Thompson, a retired teacher and commercial fisherman who was among a crowd jamming the Anchorage dividend office on March 31, the deadline for this year's applications.

Legislators' move to limit eligibility has support among others, too. "I think it's better for the people that are here," says Leinani Lopes, who moved to Alaska from Hawaii and was applying for her first dividend.

Weyhrauch has promised the issue will be picked up in the next legislative session.

The dividend does attract people to the state, though it's difficult to determine to what degree, Mr. Fried says.

A study published in 2003 by University of Alaska Southeast economist Ashley Ahrens concluded that the dividend has even encouraged families to grow. It said that of the 17 births per 1,000 Alaskans in 2001, a statistical analysis showed that three could be attributed to the dividend.

Meanwhile, some dividend critics say that the annual payout will make it almost impossible for the state to use fund earnings when they're needed to pay for government services.

"Many Alaskans believe this is an entitlement. I don't. I think the Permanent Fund dividend was one of the worst things that we got ourselves into a number of years ago," then-House Speaker Pete Kott said three years ago, making him one of the few politicians to criticize the program.

But the dividend is credited with helping fuel Alaska's economy and helping keep the state's poverty rate low. For low-income Alaskans, especially those in the rural Bush who pursue a traditional hunting-gathering lifestyle, the dividend represents a large percentage of annual household income.

The dividend program has admirers outside Alaska, too. There are frequent calls and visits from officials in other resource-rich parts of the world interested in setting up their own fund, says Eric Wohlforth, a board member of the Alaska Permanent Fund Corp. "I'm talking to people from Russia," he says. Some academicians and US government officials have floated the idea of creating a version of the Permanent Fund for Iraq, complete with dividends.

There is little doubt that the fund helps persuade some Alaskans to stay, Fried adds. "If tomorrow we say there are no more dividends, my guess is for a lot of people, it would help them decide to leave."