Ever since the state began making the annual announcement of the size of the Permanent Fund Dividend a pale imitation of the Academy Awards, the exercise in showmanship has diverted attention from the most important number of the day in Alaska.
Trust me, it's not $900.
It's $47,083,900,000. That was the market value of the Alaska Permanent Fund as of Tuesday. It was up $77 million from Monday.
I know why we pay so much attention to the amount that almost all Alaska residents stand to collect. Nine hundred bucks is something we can understand. But $47,083,900,000 is beyond comprehension. Plus, it's only natural that money in your pocket is more important than an 11-digit total held by the state government.
Fund born in 1976
When Alaskans voted to create the Alaska Permanent Fund in 1976, Alaskans gave little thought to how big it would become several decades in the future. The early news coverage and political debate of the time focused on when the fund might reach $1 billion or $2 billion, which was more than the state budget of the time.
It's no surprise that everyone focuses on the PFD and neglects the account that bankrolls it.
But these discussions obscure the most important part of what Alaska has done with a percentage of its oil income. It's like looking at the monthly payment to determine the price of a car, neglecting the total cost of the deal.
The late Gov. Jay Hammond always said the dividend was the part of state government that would lead Alaskans to pay attention to the inner workings of their Permanent Fund. But Hammond miscalculated. The dividend created a permanent constituency for the dividend, not so much for the Permanent Fund.
Alaskans hunger for the annual check, and there is no end to the buildup for the announcement spectacle, including a sealed envelope to be opened on live TV to reveal the "secret" number, but Alaskans are not tracking the fund's operations in the way that Hammond imagined.
Worth $60,000 per person
The numbers have grown far too large for mere mortals to digest.
In rough numbers, the chief state savings account holds something like $60,000 for every person in Alaska. A portion of the earnings of the fund is used to pay out the dividend, a program created at Hammond's urging in 1980, with the first checks two years later. Those who have received every dividend will have collected $36,343 after getting the $900 this year.
Norway has its own permanent fund, one that’s about 15 times larger than the Alaska version. That’s mainly because all of Norway’s oil revenues have been saved and other taxes have not been eliminated.
In Alaska, the Permanent Fund receives a small portion of the oil owned by the state. The major source, called for in Alaska’s Constitution, is that 25 percent of oil royalties are deposited into the fund.
But we tend to forget that the Permanent Fund exists not just to churn out dividends through a formula that has long been in need of an overhaul, but it is our insurance policy. It stands as some measure of protection against the economic uncertainty that comes from living in a state with a dangerous dependence on a non-renewable resource.
The insurance is not complete, however, because with a total state budget, excluding federal funds, of about $10 billion and an operating budget totaling about $6.8 billion, the demands on the state treasury could easily outstrip future savings.
Who's watching the Fund?
Still, the Permanent Fund reduces the risk that high taxes are inevitable in the years to come as the nation's largest oil field is depleted. We neglect its day-to-day management at our own peril.
The state's news media have never tracked the operations of the Permanent Fund in any reliable fashion. By and large, people take it on faith that everything is just fine and the organization runs itself.
I'm not suggesting that anything is amiss. But just as the Legislature, the executive branch and the court system deserve to be monitored, the fund that looms large in our future is clearly in need of more attention from the Fourth Estate.
An annual report from the Permanent Fund a few years ago, put it this way: "As time goes on, it may be the size of the fund more than any other single factor, which will determine the state's level of prosperity."
That's why we need to realize there is more than $900 at stake.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch. Alaska Dispatch welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.