Zeev's Turnips Talk Politics (ZTTP)

[Soul Washer]

Purchased from Russia in 1867, Alaska became the 49th state in 1959. Under the Alaska Constitution (Article VIII. Section 2. General Authority) all the natural resources of Alaska belong to the state to be used, developed and conserved for the maximum benefit of the people. Ten years after statehood the first Prudhoe Bay oil lease sale yielded $900 million from oil companies for the right to drill oil on 164 tracts of state-owned land. Compared to the 1968 total state budget of $112 million, this was a huge windfall.

By legislative consensus, the original $900 million was spent to provide for basic community needs such as water and sewer systems, schools, airports, health and other social services.

Although the oil fields were proving to be the largest in North America, Alaskans came to agree that a portion of this wealth should be saved for the future when the oil runs out. In 1976 voters approved a constitutional amendment, proposed by Governor Jay Hammond and modified by the legislature, which stated that at least 25% of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue-sharing payments, and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments.

The Alaska Permanent Fund was thus established as a state institution with the task of responsibly administering and conserving oil and other resource royalties for the citizenry.

There are two parts to the Fund: principal and income. The principal is invested permanently and cannot be spent without a vote of the people. Fund income can be spent, decisions as to its use being made each year by the legislature and the Governor.

The Fund was established as an inviolate trust, meaning that the principal of the Fund is to be invested in perpetuity. The Fund thereby transforms non-renewable oil wealth into a renewable source of wealth for future generations of Alaskans.

Oil started flowing through the Trans-Alaska Pipeline in 1977, at the time the world's largest privately financed construction project. In February of that year, the Fund received its first deposit of dedicated oil revenue of $734,000.

All income from the Permanent Fund was to be deposited in the state general fund unless otherwise provided by law. What to do with the earnings generated and how they would best benefit the present generation of Alaskans engaged Alaskans in debate for the two decades following the establishment of the Fund.

Like Jennifer with her box of coins, the dilemma was what to do with the growing income from the Fund. Would it best be saved for the future or managed as a development bank for Alaska's economy? After a four year debate the Alaska State Legislature decided in 1980 in favor of a savings trust for the future. The Alaska Permanent Fund Corporation was created to manage the assets of the Fund.

The same year the Legislature also created the Permanent Fund Dividend Program, retroactive to January 1, 1979, to distribute a portion of the income of the Permanent Fund each year to eligible Alaskans as a dividend payment. By the end of 1982, after a couple years of wrangling with the U.S. Supreme Court over constitutional details, all residents of Alaska - every woman, man and child - who applied for and who were found eligible (must be at least one-year resident) received their first dividend which was $1000. This was the historic beginning of an annual program paying to Alaskan citizens a fair and equal share of the wealth from publicly owned resources.

http://www.earthrights.net/docs/alaska.html