What Is the Money For?
Contributed by Evan Swensen
Five people sat on a stage at Commonwealth North recently and debated the Alaska Permanent Fund dividend for nearly an hour. A journalist. A former fund CEO. Two representatives. A senator. They are serious people. One wanted to pause the dividend. One wanted to protect it as a spending cap. One wanted to redirect the earnings to infrastructure. They disagreed on almost everything.
They all started from the same premise. The money belongs to the government. The question is how much to give back.
Jay Hammond would have stopped the room. The premise is inverted.
Article VIII, Section 2 of the Alaska Constitution says the legislature shall provide for the utilization of all natural resources belonging to the state “for the maximum benefit of its people.” Its people. Not its government. Hammond did not create an entitlement. He created the only mechanism Alaska has to keep the wealth of its resources in the hands of their owners — the people of Alaska. He called government the devil for a reason. He titled his book Diapering the Devil because he saw what happens when government grows on unearned wealth rather than on consent.
One panelist framed the question with a number: the average Alaskan has never paid $5,500 a year for the state services they receive. Sixty percent of Alaskans, in this framing, have never paid for services the government provides. The arithmetic is correct. But the framing quietly asks what Alaskans owe the government. Hammond’s question runs the other direction. What does the government owe the people whose wealth it holds? To say sixty percent of Alaskans have never paid for their services is to treat the resource as belonging to the state rather than to the people. This is the inversion Hammond warned against for the last decades of his life.
When North Slope oil leases were auctioned in the 1960s, the state received $900 million and spent it quickly. The speed alarmed enough Alaskans to pass a constitutional amendment in 1976 creating the Permanent Fund. The vote passed two to one. The word dividend never appeared in the amendment. The first checks went out in 1982 under a statute. But the purpose was clear: turn finite wells of oil into an infinite well of wealth for the people of Alaska.
Other states answered the purpose question before they started spending. Texas created the Permanent School Fund in 1845 — now worth more than $65 billion — dedicated entirely to public education. New Mexico created its Land Grant Permanent Fund in 1912 for public education, adding early childhood funding by constitutional amendment in 2022 with a floor guarantee preventing the fund from being drawn below $17 billion. Wyoming created a mineral trust fund for government services with no dividend and no annual fight. Each state decided what the money was for. Then they spent it.
Alaska created its fund in 1976 and has spent fifty years dividing the money without ever deciding what it is for.
The fund now holds more than $80 billion. The annual draw is approaching $4 billion. Last year, nearly a billion dollars went to dividend checks. The capital budget for the entire state was $180 million. Alaska has $2.4 billion in deferred maintenance. Three thousand three hundred rural homes lack running water. Schools are condemning wings. The Dalton Highway needs maintenance the state cannot fund. Thirteen years of net out-migration tell us working families are answering the question with their feet.
Meanwhile, in the Mat-Su Valley and across Anchorage, homeowners just received their property tax cards. Anchorage voters rejected a $12 million school levy to retain eighty teachers — not because they do not care about schools, but because they are tired of being the only ones asked to pay. The Permanent Fund earned billions. The school district cannot keep eighty teachers. It is a state sitting on $80 billion and sending the bill for classrooms to the property taxpayer.
The discussion we need is not the one Commonwealth North held. The panelists debated arithmetic. Hammond’s question was about purpose. Until the legislature answers the purpose question, every argument about the dividend — full statutory, reduced, paused, or eliminated — is a fight over fractions when the whole number has never been defined.
The money belongs to the people of Alaska. The Constitution says so. The question is not what Alaskans owe the government. The question is what the government owes Alaskans. Answer it. Then spend accordingly.
Evan Swensen is a prior-to-statehood Alaskan, prior bush pilot, publisher and founder of Publication Consultants in Anchorage. He is the author of What’s the Money For? and The Power of Authors.