Community Perspective

How Alaskans got the permanent fund

Among all the fury and bombast about the permanent fund dividend and whether it is deserved, an entitlement or just a nice deal, I saw a letter that appeared in the Daily News-Miner, in which the writer claimed he deserved the PFD because it was a payment in lieu of his property rights to mineral resources he couldn’t claim because of the unique constitutional condition that subsurface mineral rights do not belong to landowners in Alaska. The Alaska Constitution is the only one in the United States that has this provision, and it is quite important. That owner, and any private property owner in Alaska, is kept from getting mineral royalties and proceeds from any minerals under the state land that he or she owns or purchases. It is important to know why we are different in this matter and what is behind this curious situation.

For instance, is it a reasonable provision? When Alaskans were creating the constitution in 1955 in anticipation of statehood, there were very few people here. Too few, in fact, to support a government and the services needed to develop the state through taxation, which was the norm everywhere else in the country. Alaska is huge, and transport, freight costs and simple travel are huge expenses here, and there were fewer roads then and not many even now. To be able to afford the costs of the state government, the idea was to endow the state with all the subsurface mineral rights on land it would acquire through statehood. It was placed in the constitution for that very sound reason: It would give the state an economic base to exist, without excessive taxation. Pretty good thinking, I’d say.

Move ahead to 1959 to about 1968, and those first years of statehood were very tough economically for the state, because Alaska was slow to select lands and budgets were strained. Then 1968 came, and the first lease sale of the Prudhoe Bay area occurred and everything changed for the better economically, and ultimately, of course, that led to the Alyeska pipeline.

Most importantly today is that it also led to the state’s ability to establish the Alaska Permanent Fund by constitutional amendment. Without this subsurface rights requirement, and the ownership of the oil collectively by the residents of the state, the oil income would not have gone to the state in a public way but rather to private people and certainly not in equal shares. And, again, ultimately this led to the permanent fund dividend, which we each get in equal shares. I point all this out because I am pretty sure most people have no idea that these conditions and the constitutional requirement that the state own the subsurface rights for minerals and oil led to the permanent fund and the ability to fund state government — until lately, that is.

So the uniqueness of the Alaska Constitution is primarily responsible for Alaska’s greatest idea: the permanent fund. Although the framers of the constitution didn’t anticipate something like the permanent fund resulting from that stipulation of mineral rights being owned by the state, the fund wouldn’t have happened without it. And more importantly, the permanent fund was always intended to fund state government when needed (and yes, reducing taxes). And now we need it for that.

To put the funding of the PFD before the funding of state government is getting it exactly backward and violates the intent of the constitution and the permanent fund. Someone needed to point this out, and I just did. The permanent fund earnings are there to fund the government as needed. The PFD is just a wonderful perk and should never be a higher priority than the state budget we all depend upon.

Rich Seifert is a professor emeritus of the University of Alaska Fairbanks. He lives in Fairbanks.


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