I hesitate to predict what comes next, but I have some idea how the future appeared 40 years ago when I wrote a three-part series for the Fairbanks Daily News-Miner on what experts envisioned for the fledgling fund.
The account was so small at the time that it barely registered with the public — the discussion was entirely about what might come to pass.
I checked with the consultants, read their reports and interviewed Gov. Jay Hammond and legislators who had conflicting ideas about the future.
Looking back at this reporting project, published Sept. 1-3, 1977, nine months after voters approved a constitutional amendment to create the fund, I am struck by a couple of things.
First, while Hammond never tired of talking up his "Alaska Inc." plan that five years later would evolve into the dividend program, the idea of handing out cash to individuals seemed far-fetched when the Permanent Fund was first in operation. It was not created to pay dividends. That came later with an act of the Legislature.
The cash had yet to accumulate, the state was running a deficit and Hammond had more public critics than allies.
Second, there was far more talk about diversifying the economy by using the fund to subsidize loans to individuals, communities and businesses. Some people wanted a savings account, while others thought the fund might earn enough income someday to allow taxes to be decreased.
Most Alaskans liked the idea of the Permanent Fund, but there was no consensus on how to structure the investments or deal with the earnings.
There were those in the Senate who wanted the fund to become a development bank that would promote projects hither and yon.
Had that happened, we would probably be talking today about the fund in the past tense. In the House, Reps. Clark Gruening, Hugh Malone and others preferred a trust fund. They prevailed, but that was no sure thing in 1977.
At the time, Gruening said he didn't believe the fund would ever be big enough to produce enough income to eliminate taxes. It would have to reach $10 billion and earn 10 percent a year, figures that seemed impossible.
My editor, Kent Sturgis, decided to call the series "Permanent Fund: Alaska's Nest Egg?" The fund was tiny and its future was a question mark. It had earned $45,000 in interest in its first five months.
Sterling Gallagher, then the revenue commissioner, told me 40 years ago he expected the fund would grow to $60 million in its first year. It is now $61 billion. Simply adjusting for inflation in consumer prices, that's about $15 billion in 1977 dollars.
But even that number grossly exaggerates the size of the account, Gallagher said Saturday. He believes a more sophisticated calculation that recognizes changes in investment and consumption patterns over 40 years would put the current value of the Permanent Fund at the equivalent of $4 billion in 1977 dollars. People have inflated ideas about what this account represents, he said.
Alaskans embraced the creation of the fund, I wrote back then, as a way to save money so that the state would not be broke when its nonrenewable resources vanished.
"Many also see it as a way to hold down state spending and to break the traditional pattern of expenditures rising as quickly as revenues or more quickly," I said.
The state had a $100 million deficit that year, but expected that oil money from the North Slope would be adding $1 billion a year or more before long. It was more.
Had I asked about what the fund would look like in 2017, Hammond and the others would have guessed, but I wasn't thinking that far ahead. The state was accustomed to just scraping by and the distant future meant what would happen in the 1980s and 1990s.
There was a sense across the state that we'd be lucky if the oil boom and the pipeline lasted until 2000, which influenced how Alaskans thought about the fund and its future.
I quoted estimates saying that by 1985, the Permanent Fund could reach $1.3 billion.
The account reached $4.3 billion by 1983, growth spurred by a doubling of oil prices after the 1979 Iranian revolution, one of many things that Alaskans never saw coming.
The dream that the Permanent Fund would be a check on government spending proved ineffective because, even with saving 25 percent of oil royalties, as required by the constitutional amendment, there were billions more than anyone had expected.
I wrote that two big questions on the horizon were what to do with money in the Permanent Fund and what would happen to Alaska when the oil was gone. Those questions remain.
Columnist Dermot Cole can be reached at email@example.com.
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