On Feb. 28, 1977, the first deposit of dedicated royalties was made into the Alaska Permanent Fund. The amount was $734,000. The fund and its earnings reserve account have now grown to a combined balance of over $57 billion. This does not include the more than $24 billion that has been distributed to Alaskans over the last 35 years.
As we debate the role of the fund, and its place in assisting the state's recovery from its current fiscal crisis, I pause for a moment to think about the history of the fund and its creation.
The formation of the fund is amazing in many ways, but even more so when one thinks about the very difficult decisions facing our state at the time. Alaska was a young state – not even 20 years into statehood. We had pledged to the federal government and to our fellow Americans that we could, and would, seek out ways to support ourselves as a state.
The discovery of Alaska oil in the late 1960s led to one of the largest oil and gas lease sales in U.S. history. The Prudhoe Bay lease sale raised $900 million, while the state budget for fiscal year 1968 was a mere $112 million. This prodigious outcome demonstrated Alaska could, in fact, generate revenues to maintain and build state infrastructure – roads, water systems, schools – in support of our communities.
Given the list of needs throughout Alaska, it was no surprise the $900 million was quickly spent on a variety of priorities, including infrastructure and social programs. The velocity of that spending and its impact on the state's economy, however, caused our leaders to take a step back.
Many were taken aback by how swiftly the value created from our nonrenewable resources could be consumed. The 1974 race for governor centered around the question of using Alaska's newfound and rapidly growing wealth.
In effect, were Alaska's resources a collective property to be used for the common good or did the resource belong to individual citizens? What obligation did we have to the current generation to invest in our state, and what obligation did we have to make sure future generations also received the benefit of Alaska's resource wealth?
The answers to these questions continue to be the foundation of the debates we are having today.
In November 1976, the citizens of Alaska passed a constitutional amendment requiring a portion of the state's resource wealth be set aside in a permanent fund, the principal of which is not to be spent. This was to ensure future generations would receive benefits from the nonrenewable resources harvested years before.
Deposits to the principal, through contributions of state mineral royalties, special legislative appropriations and inflation-proofing, now total more than $39.6 billion.
While the principal of the fund cannot be spent, the income created by the investment of the fund was designed to be available for current generations. Since the first dividend of $1,000 was paid in 1982, more than $24 billion has been distributed to Alaskans.
I continue to be amazed at the fortitude and vision of Alaskans who were willing to put aside a share of this resource to build what has become one of the world's leading sovereign wealth funds.
At the Board of Trustees' February meeting, we had the honor of recognizing the 40th anniversary of the fund with Gov. Bill Walker, Lt. Gov. Byron Mallott, Senate President Pete Kelly and Speaker of the House Bryce Edgmon.
The reason we can have the debate we are having today is due to the mindful stewardship of the fund and the contributions of past and current Alaskans to its success. I am humbled and honored by the faith and confidence fellow Alaskans have bestowed upon me and the trustees in entrusting us to manage and protect the legacy of the Alaska Permanent Fund.
Angela Rodell is CEO of the Alaska Permanent Fund Corp. and a former commissioner of the Alaska Department of Revenue.
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