If we’re serious about protecting Alaska’s Permanent Fund Dividend, we have to start with a clear understanding of how it came to be and why it matters. We must also stop speaking out both sides of our mouths and actually do something to fix it rather than just wave our magic PFD wands during election season.
The Alaska Permanent Fund was created in 1976, after voters approved a constitutional amendment to set aside a portion of the state’s oil tax revenue for future generations. This idea, championed by Governor Jay Hammond during his tenure from 1974 to 1982, was Alaska’s way of turning a one-time oil boom into lasting prosperity. Unapologetic capitalism at its finest, great job Hammond!
Hammond saw what most politicians didn’t. Oil money would eventually run dry so he created a savings account that couldn’t be raided easily. Thus, the Permanent Fund was born. Unfortunately, for the last eight years we’ve been doing POMV (percentage of market value) draws (we actually sell 5% of the total fund value every year to help fund government). Terrible idea in my opinion.
[We must] cut spending and increase revenue so we can allow the fund to grow again. Otherwise, we’re just eating our seed corn.
We’ve also blown through over $25 billion in savings the last decade or so. The current value of the fund is around $84 billion. We’ve sold off $26 billion in the last eight years with POMV draws. The S&P 500 has way more than doubled during that time. If we weren’t doing those draws the fund would probably be in the ballpark of $120-140 billion depending on how we invested it. Imagine the PFD sizes if that had been the case? Or the capital projects we could have built to lower our utility costs?
Before the discovery of oil and before Hammond’s forward thinking leadership, Alaska looked very different. Alaska funded our basic services like public education, roads, law enforcement and prisons with a personal income tax. There were no oil taxes, no Permanent Fund and certainly no dividends. It was just hardworking residents footing the bill to keep the lights on.
That model changed overnight once oil started flowing from Prudhoe Bay. Billions in oil taxes started pouring in. These corporate taxes quickly replaced the need for an individual state income tax and paid for much of Alaska’s government services. They also helped the Permanent Fund grow rapidly.
In 1982, just before Hammond left office, the Legislature created the Permanent Fund Dividend program. This program gave every Alaskan a share of the fund’s earnings each year. It was a simple concept with a powerful impact: if you live here and share ownership of the state’s resources, you get a dividend. That annual payment, made possible by oil taxes, turned mineral wealth into a tangible benefit for every resident.
Unfortunately, we’ve drifted far from the original mission.
Our revenue from natural resources is now so thin compared to what it was not too long ago that we can barely keep our heads above water.
None of this is rocket science. If we want to restore a full statutory PFD and protect the long-term health of the Permanent Fund, we must stop relying on POMV draws and residents mineral rights to balance the budget. The only way to do that is to cut spending and increase revenue so we can allow the fund to grow again. Otherwise, we’re just eating our seed corn.
Let me give credit where it’s due.
The legislature, led by Gov. Mike Dunleavy, has done a great job controlling government growth over the past several years. In 2015, Alaska had nearly 15,800 full-time employees. By 2024, that number had dropped to about 14,560 for a reduction of about 1,235 positions, or nearly 8%.
That didn’t happen by accident. Gov. Dunleavy, since taking office in December 2018, has made tough choices to streamline government operations and curb spending. He deserves credit for putting downward pressure on the size of government. That discipline has helped slow the growth of spending and prevent an even deeper budget crises.
But that’s only half of the equation. We must also increase our natural resource revenue, and we must do it immediately. Unfortunately, as I mentioned in part one of this series, our revenue from natural resources is now so thin compared to what it was not too long ago that we can barely keep our heads above water.
ALASKA WATCHMAN DIRECT TO YOUR INBOX
The PFD is a reflection of residents ownership in Alaska’s resources. As I said before, it’s UNAPOLOGETIC capitalism at its finest and our state constitution is very clear on this.
Article VIII, Section 2 of our constitution reads: “The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.”
Keywords being maximum benefit of its people.
We need a serious plan to fix the structural spending deficit. That means closing tax loopholes for out of state corporations, modernizing/simplifying outdated revenue laws and returning to a system where Alaskans benefit first. We are a resource-rich state with global value. Let’s act like it.
Above are a few graphs I pulled off the state website (they make these really hard to find BTW) that show department spending the last decade as well as general fund revenue for the last 60 years or so. The other shows how fast our savings accounts are being depleted. Let me know if you have any questions about them.
The views expressed here are those of the author.
22 Comments
No graphs. Please correct
Dear Employee,
Yes, Mr. Yundt; supposedly you work for us. That would make you an employee. We are not happy with your performance during the last legislation session. As a conservative, your litmus test results have come back as “FAIL”. Your siding with the state employees union and the NEA was unacceptable. “maximum benefit of its people” is code-speak for “growing state government with the fabulous amounts of wealth until we (employees hiring more employees) deplete the fund and then rage for a state income tax because we ran out of your money.”. Our current education system is on the top 10% in money spent. YET it is in the bottom 10% (48th) in student testing. You voted for the education budget. You are rewarding failure. Unacceptable.
The only way to do that is to cut spending and increase revenue so we can allow the fund to grow again. I agree, however, the lack of political will or desire to do the cutting is what has been lacking since 2016 when the raid on the PFD began. It still continues without much political consequences for not following the statutory formula (approximately $3,892 for 2025 PFD not $1,000 which is the smallest ever – when adjusted for inflation).
SHORT MEMORY PROBLEM MR YUNDT!!!? YOU THE NEWBY, ” TAX THOSE OIL PRODUCERS MORE”.SPEAKING OUT BOTH SIDES OF THEIR MOUTH IS YOU MR YUNDT! CONSERVATIVE? YOUR NOT! YOU ARE ANOTHER RHINO!!! AS FAR AS DUNLEAVY REDUCING GOVERNMENT! LETS SEE ,HE DOUBLES THE SIZE OF H&HS! HE CHAMPIONED IDEAS LIKE DIV OF AG. GOVERNMENT FISH FARMING! DONT FORGET HIS PERVERT ON STAFF SENT TO ADOLESCENTS FOR SUICIDE PREVENTION! I WHOLE HEARTEDLY AGREE ,GIVE CREDIT WHERE IT IS DUE! CARBON SEQUESTRATION IS CERTAINLY A WINNER HE ALSO OUGHT TO GET CREDIT FOR!
FACE IT MR YUNDT, YOUR A ONE TERMER BECAUSE YOUR NOW APPEARING TO BE A DESPERATE LIAR!
Yup.
Raise taxes on oil producers and expect to grow the industry?
Yundt you are confused.
It’s the law to a full PFD end of story
The Alaska Supreme Court threw out that law over nine years ago. It’s not even listed in the Alaska Statutes anymore. I’d welcome you to reality, but it’s clear you have no intention to leave Fantasyland.
We know now the Alaska Supreme Court is only Supreme in name. It’s actually Extremely Corrupt Court.
And the decision remains. The “statutory PFD amount” is as dead as the dodo bird, and whining about it won’t bring it back to life. Moreover, a constitutional amendment created by ballot initiative to steal it back isn’t legal, either.To amend the Alaska Constitution, a proposed amendment must receive a two-thirds vote of each house of the Alaska State Legislature and then be ratified by a simple majority of voters at the next general election, or by Constitutional Convention.
Good luck with either approach…………….
Yundt, quit making excuses why the politicos are STEALING our PFD checks.
You ARE the problem.
“………The PFD is a reflection of residents ownership in Alaska’s resources. As I said before, it’s UNAPOLOGETIC capitalism at its finest and our state constitution is very clear on this……….”
The dividend has absolutely nothing to do with capitalism. It’s pure socialism, and fully half of the $25 billon POMV draws you wisely bemoan, and it has been fully wasted on retail garbage. The dividend was the biggest mistake this state ever made, and the cost hasn’t even started yet. The fight is just beginning…………
i dont see the PFD as being a lot different than Socisl Security in some ways. Government “borrows” from my investment accounts and never bothers to pay my earned dividend money back.
The PFD is NOT capitalism in any form. It is, however, a perfect example of socialism. Money for nothing. The PFD should be eliminated. It misspends money we need for a hundred worthy state projects and programs plus, twice a year we have the same time-wasting discussions. Some pro socialist PFD folks claim the statutory dividend is the law. It is now, but it can be changed. Simple process, massive opposition.
Hey Yundt. Cut spending and stop voting for tax increases. Have some courage and stop breaking the law by stealing our PFD. Tribunals are not out of the question in the future for legislative lawbreakers.
i’ve reported you to the FBI. This is a threat against a public official.
joel, please deal with the constant threats made in the discussions on your site.
your overly sensitive and afraid of needed accountability!
It is not a threat in any way. It is well within my first amendment rights. You should familiarize yourself with the law before you spout.
Employee Yundt- the “magic wand” is keeping spending in check. As a business man, you understand budgets. When you have cost overruns, you pass that cost onto the customer. As a legislator employee, you’re passing the cost of government (social programs) as increased spending onto the customer (Alaskans) by reducing (stealing) a large cut of our PFDs. Back in the 1700’s. There was a device doctors used for a medical procedure. It was a set of bellows and a burning container. It was used for blowing smoke. You’re using it right now on Alaskans.
Mr. Yundt has indicated graphs but they do not appear in the article. Joel?
Eventually, stealing the PFD will not be enough for the big spenders. It’ll be income taxes next.
RHINO
What does RHINO stand for?