“It’s Something Deep in Our Blood” — Alaska Pays Residents, Even as It Struggles to Recover.

An oil-based economy frets about the future.

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Alaska takes your breath away. Even in November. Maybe especially in November.

However, I’m forcing myself to stop staring at the spectacular scenery so I can follow the money. It’s what I’ve done in Hawaii and Peru for Wells $treet, because money always tells an interesting story, no matter the backdrop.

Here on ”The Last Frontier,” the money moves in a peculiar direction.

In most states, residents pay taxes.

In Alaska, the state pays you.

Alaska has no state income tax, no state sales tax, and no state property tax. Some local municipalities don’t charge taxes, either.

Instead of taking money from residents, Alaska gives it away. The Alaska Permanent Fund sends annual payments to every eligible resident who opts into the program. (Who wouldn’t opt in for free 💰?)

To qualify for the Fund, a person must live in Alaska for a year, and even kids can receive payment. You do not qualify if you’re incarcerated. Ex-felons are also barred from participating, as well as those convicted of certain misdemeanors.

The Fund is currently worth $81 billion, and this year’s payout is $1,114 per qualifying resident. That’s more than 2020’s $992, but a lot less than the $1,606 residents received pre-pandemic, in 2019.

The money comes from oil revenues, and that concerns people like Jeff Rogers. Jeff is finance director for the city and borough (county) of Juneau. He‘s worked in state and local government for nine years. He also leads a surprisingly exciting life for someone who crunches numbers in spreadsheets all day. More on that later.

“I think the background reality is that oil production off the North Slope is coming to its geological tail,” Jeff tells me.

Trans-Alaska Oil Pipeline/Piriya Photography

I spoke to Jeff last week in Anchorage, where I attended a conference of government finance directors from around the state, including those from the North Slope and tribal communities.

Jeff Rogers, Finance Director for Juneau, Alaska

WHAT’S AFTER OIL? ALASKA “HAS NO IDEA.”

Jeff says when oil is in the $40 range, as it was in 2020, “It’s very difficult for Alaska to pay for the government.” He says the state needs oil prices where they are now, $75-$80 a barrel, to make ends meet. “That oil price volatility is what has made it very difficult for the state of Alaska to pay its bills.”

Oil production is trending down, and Alaska could run out of petroleum in a few decades. What’s the economic plan after that? “In short, Alaska has no idea,” Jeff says.

The state depends heavily on tourism as well. Jeff says last year was rough, especially in his hometown of Juneau. “Cruise ship ports were devastated.” Ships have returned in 2021 but with limited capacity. “We lost 20% of our [local] sales tax,” he says — a hefty $10 million, or 10% of Juneau’s general revenue. “We also lost $15 million in passenger fees,” he adds.

Glacier Bay Park & Preserve/John Elk

Overall, Alaska’s recovery is lagging behind the rest of the country. Its economy was already depressed before Covid, and fewer than half the jobs lost in the pandemic have returned.

It also has the nation’s highest per-capita number of job openings. One reason is that more people are moving out of state than moving in, a trend that started a few years ago. Jeff says the idea of hiring remote workers who live in the lower 48 or Hawaii makes some Alaskans “uncomfortable.”

DIVIDE THE DIVIDEND?

All of this has forced state government to take a harder look at the annual dividend to residents. Those payouts were projected to be as high as $2,700 in 2017 and 2018, but the governor and legislature slashed them by 30% to 50% those two years because Alaska had budget deficit.

Still does.

Debate is heated over whether to lower the dividend and use more of the Fund to pay for government services. “Do you want more money for schools, more money for troopers, more money for transportation, for all the things the state does, or do you want a bigger dividend?” Jeff asks. “People are pretty polarized on that issue.” So is the legislature.

But many Alaskans have come to depend on the payout. Jeff calls it “something deep in our blood.”

I even asked my Uber driver about the dividend, and he says it’s one reason he’s so busy this month. “I have less competition,” he told me, because other drivers are staying home after receiving their payments. “They also probably haven’t put on their snow tires yet,” he added, as we drove through snow-covered streets.

The temperature was seven degrees.

THE HUNT FOR RARE EARTH ELEMENTS

Many Alaskans are hopeful that large new mining operations will usher in a different kind of economy, one that offsets the decline in oil supplies — especially if Alaska can extract the rare earth elements (REE) necessary for batteries in electric vehicles. The state’s Department of Natural Resources believes the prospects for REE look good.

Glenda Ledford, mayor of Wasilla, told the finance directors who met in Anchorage that they need to promote the 74,000 small businesses in Alaska, which she says account for 99% of all companies. “We need to keep our money where our heart and spirit lives,” she urged. They applauded in agreement.

“I KNEW MY HEART NEEDED A WILDER PLACE.”

Alaskans are a special breed. The ones I’ve met are friendly and hearty. The women are strong and confident (and often chatty!). I went to dinner with a group of finance directors who opted to walk to a restaurant a few blocks from our hotel. “It’ll only take 10 minutes,” they assured me.

The temperature was two degrees.

I was bundled up in everything I owned. Most of them didn’t even wear gloves.

Impressive.

One of those plucky pedestrians sans gloves was Jeff Rogers, whose exciting-life-for-a-finance-guy I teased above. Jeff is not an Alaska native. Born and raised in Michigan, he earned a Master’s of Fine Arts from Yale. His friends in New Haven left for cities like New York and Los Angeles, but he didn’t follow. “I knew my heart needed a wilder place,” he tells me.

So Jeff came to Juneau to manage a local theater company. There he discovered he had a knack for finance, and he never looked back. It’s also where he met his husband, James Hoagland, aka “Gigi Monroe.” Like I said, his life is not boring.

Neither is Alaska.

“I walk five minutes to work, and I can walk five minutes to a trailhead and be on top of a mountain in an hour,” Jeff says. “I just don’t know that I could do that anywhere else in quite the same way.”

Cover photo of the Northern Lights near Atigun Pass, Alaska, by Noppawat Tom Charoensinphon. And what a photo!

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