In the early winter of 1969, at a downtown Anchorage hotel, a conference of more than 100 respected Alaskans from all walks of life gathered to discuss how to use the state’s brand-new oil wealth, while the legislators who had called them together sat back and listened.
Yes, they did things differently in those days.
I went back to read about decisions at the dawn of the oil era, looking for the roots of the mistakes that have left Alaska, more than 50 years later, facing the nation’s worst social and economic problems, and apparently unable even to seriously discuss how to fix them.
Reading old newspapers from back then, I imagined what might have been.
The down payment on the new Alaska arrived in September, 1969, when oil companies bid $900 million for Prudhoe Bay. It was enough money to change everything — multiples of the state’s annual budget — but it was also only a start. Ten years later, after completion of the trans-Alaska oil pipeline, oil royalties and taxes would begin paying much more every year.
The Conference on the Future of Alaska met four times during November and December, three or four days each session, to hear from experts and talk. The Brookings Institution organized it on behalf of the Legislature. Newspapers carried the conversations on their front pages daily and the Anchorage Times published the final conference report in full as a special section, two days before Christmas.
What else was different than today?
The meetings were nonpartisan. The discussions were serious and substantive, about values and how to protect them, not about winning. The delegates took in new information, considered one another’s perspectives, and changed their minds. They worked hard until they reached a consensus.
The resulting document is inspiring and also sad. Sad, because goals the conferees believed were within reach are now, today, distant dreams. Some are farther away than ever.
The conference put the highest priority on excellent education, including state-funded preschool for all Alaska children. (That finally became policy in 2022, as I wrote in my last column.) They turned down the idea of saving oil money in a trust such as the Alaska Permanent Fund. I didn’t find any consideration of giving the money away.
A giveaway would have violated the original purpose of Alaska’s resource endowment, which the state received only for collective advancement of society, not for individuals.
The conference rejected saving the oil money in a trust because it preferred to invest in people rather than stocks and bonds. Investments in education and health could produce a prosperous and growing economy for a thriving state.
“We must recognize that this generation is the present trustee for the future of Alaska,” they wrote. Like good parents, they would pay for their kids’ college, not their retirement.
And the conference specifically opposed ending the state’s income tax. Alaskans in 1969 were used to paying for government. They most feared losing that community spirit, the Alaska way of life of self-reliant, outdoor people who could count on one another.
A giveaway society is the opposite of that spirit. And getting rid of taxes would be the biggest giveaway of all.
From biblical times, governments have levied taxes as the unavoidable cost of living together, paying for security and the rule of law, and for public goods that support wealth generation, such as transportation, infrastructure and schools.
The affluent get the greatest benefit of those services, without which they couldn’t accumulate or protect their wealth. And in a normal state, they also pay the most in taxes. In Alaska today, they still receive the greatest benefit from government, while they also save the most by paying no taxes.
Through the 1970s, however, Alaska generally followed the consensus from the conference. The state continued to levy personal income taxes while spending approximately two-thirds of the 1969 lease sale bonanza on education.
I was among the beneficiaries, attending excellent Anchorage schools until my graduation in 1981. Our schools were innovative and growing and Alaska teachers were among the best-paid in the nation. When Alaska students began taking nationally standardized tests in the 1990s, they ranked above most other states.
In 1976, Alaska created the Permanent Fund by constitutional amendment, but not the dividend. The fund’s only purpose was to set aside a small share of future oil revenue—about 11%, in practice. Even while saving, however, Alaskans continued paying personal income taxes.
Then, in 1980, the really big money arrived and the consensus fell apart. (I told that story in a previous series). The state repealed the income tax and, in 1982, began sending out Permanent Fund dividend checks. Legislators spent the money as if it were infinite.
But the epic and never-equaled spree lasted only a few years. When oil prices dropped, the state choked off spending, and the economy collapsed. People left, as they are doing now.
Rich years have occasionally come since, but the overall story of the oil era was of scarcity. As population grew and oil production fell, Alaska institutions pared back. When prices spiked — as they did around the first Gulf War and the 2008 financial crisis — we had brief parties with giveaways and white elephants until the next round of belt-tightening.
The private economy grew slowly, with federal spending always its largest driver. Incomes stagnated. Education particularly suffered. Teacher salaries and pensions didn’t keep pace and became uncompetitive with other states. Programs were cut and schools closed. The teacher training program at the University of Alaska Anchorage lost accreditation.
And now another, worse round of education cuts is coming.
Today, Alaska’s educational achievement consistently ranks among worst nationally. In 2022, on the same national tests where we were in the top group 30 years ago, Alaska fourth graders scored second to last among all the states. Alaska’s high school graduates are by far the least likely to go to college.
Now let’s imagine the path that wasn’t taken — the path charted by the conference in 1969. What if, instead of dividends and tax-free government, Alaska had invested that money in pre-K through university education? We could have had the best system in the country.
Nationally, education has been the key to economic growth. When America de-industrialized, beginning in the 1970s, the economy transitioned to services, knowledge creation and innovation. Cities and states that invested in education transitioned successfully and are more prosperous than ever — even formerly rusty, brawny places like Pittsburgh, which became a tech and finance hub.
Global competition cut the value of physical goods, with their worth set by the lowest-cost producer on Earth. But huge new fortunes emerged from intellectual property and creativity, the unique products of clever minds. America stayed at the top of the economic pyramid not by making things, but by dreaming up things for others to make and keeping the profits.
With superb schools and universities, Alaskans might have shared in those new ideas. Alaska might have maintained sustained economic growth, even during oil downturns. The tax base would have grown, too, generating a virtuous cycle of continued investment in our people.
The decline of the oil industry might have felt like the exhaustion of a rocket booster after the spaceship is already flying, rather than feeling, as it does, like the wings falling off an airplane.
And one more thing. With a successful education system in the knowledge economy, our young people would have stayed. We would have had not only a stable population, but a different population.
Who would we have been? Who will we be in another generation?
I’ll consider that in the next and final part of this series.
Charles Wohlforth was an Anchorage Daily News reporter from 1988 to 1992 and wrote a regular opinion column from 2015 until 2019. He served two terms on the Anchorage Assembly. He is the author of a dozen books about Alaska, science, history and the environment. More at wohlforth.com.
The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to email@example.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.