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Alaskans' Unique Payout Could Be at Risk

State is struggling to pay its bills
By Newser Editors and Wire Services
Posted May 15, 2020 12:03 AM CDT

(Newser) – Alaska has no income tax or statewide sales tax, and it cuts residents a check every year from its oil wealth. But the future of that unique payout is in question amid low oil prices and an economy battered by the pandemic. The size of the check—expected to be about $1,000 this year—has become a political battle in a state that already struggled to pay its bills, the AP reports. Many of Alaska's 730,000 people see the money as a right. For some, the checks go toward vacations, vehicles, or college savings. For others, they're a key part of their income, especially in rural areas where staples like milk, soup, or laundry detergent have to be flown or shipped in and can come with luxury price tags.

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The checks come from earnings from the state's nest-egg oil wealth fund, which is now valued at around $60 billion. Without sharper budget cuts, new revenue from taxes or other measures, “it’s a very real possibility” the program "would either completely or very substantially go away," economist Gunnar Knapp says. The state faces an estimated $970 million shortfall for the coming year. Lawmakers have been using savings and oil fund earnings to fill the gaps, and some worry taking too much from earnings could threaten the fund itself. If oil prices stay below $35 a barrel, Rep. Zack Fields, an Anchorage Democrat, sees no checks "in the foreseeable future, period. There’s no way around that, unless you want to burn our state to the ground in the next five years to pay a short-term dividend."

(Read more Alaska stories.)

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