Permanent Fund dividends are expected to exceed $1,500 this year but likely will shrink sharply in subsequent years to as little as $68 in 2013, the fund's top manager told state legislators last week..
The reason for the decline is recent large losses on some of the fund's investments, particularly stocks.
Mike Burns, executive director of the $27 billion oil-wealth savings account, laid out a 10-year projection of the size of dividends that Alaskans can expect.
Amounts range from $1,512 this year to $845 next year, ultimately hitting bottom at $68 in 2013.
After that, dividends are projected to start rising again to as much as $1,771 in 2018.
Burns, testifying in Juneau before the Senate Finance Committee, stressed the projections are far from guaranteed, as they're dependent on assumptions such as an 8 percent annual gain on investments and other factors such as changes in the fund's investment approach.
Burns offered the forecast in a hearing on Senate Joint Resolution 9 -- what one backer, Sitka Republican Sen. Bert Stedman, calls the "dividend stabilization plan."
The plan would overhaul how the state pays for dividends and would have the effect of producing a steady dividend of more than $1,200 each year from 2010 through 2018, according to a second set of projections Burns provided the committee.
Stedman said he believes the plan would benefit Alaskans by creating a sizable dividend consistently each year. Meantime, the Permanent Fund could continue to grow because long-term investment gains are expected to beat the 5 percent legislators could spend out of the fund each year, he said.
Alaskans now depend on the dividend, and a $68 payment won't sit well, Stedman said.
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