Alaska’s budget crisis has state leaders paying new attention to the Alaska Permanent Fund, and doing something that they’ve never done before: Show up at the fund’s Goldbelt Building headquarters for meetings of its board of trustees.
The six-member board rotates its quarterly meetings around the state, usually holding them in the Anchorage, Fairbanks and Juneau population centers. But it’s been unable to attract much attention, even with meetings scheduled in Juneau during the legislative session so elected officials can attend.
It wasn’t long ago that the board was even questioning whether the session meeting in Juneau made sense, given the lack of interest shown by legislators and others in attending.
At the fund’s Board of Trustees meeting in Juneau last week that all changed, with Gov. Bill Walker, Lt. Gov. Byron Mallott, Senate President Pete Kelly and House Speaker Bryce Edgmon and others all making appereances.
Sitting in the Permanent Fund are tens of billions that would solve the state’s budget problems, but only if state leaders can persuade the public to let them spend it.
Walker used his appearance before the board to advocate for his proposal to use the Permanent Fund, instead of oil revenue, to fund state government.
“Our money makes significantly more revenue than our resources coming out of the ground, and we need to acknowledge that,” Walker said.
Walker told the trustees and staff that past state leaders, Gov. Jay Hammond and others, have put the state in an enviable financial position by saving for the future.
“Putting money aside was very wise,” he said.
And Alaskans have been very protective of the fund, which helped it to grow to its current $55 billion.
Among the reasons for the fund’s popularity, said Mallott, is the dividend, which provides Alaskans with a personal stake in the fund through an annual check.
“The dividend was brought in to cement the loyalty of Alaskans to the fund,” said Mallott, who as a former chair of the Board of Trustees, as well as a former executive director of the Alaska Permanent Fund Corporation, and knows as much about its history as anyone.
That loyalty and dividend have made the fund what’s known as the “third rail” of Alaska politics, akin the electrified rail of some subway systems that can be fatal to touch. In Alaska, proposing to a raid on the Permanent Fund, and spending proposals are usually called “raids” by opponents, can be politically dangerous.
But Walker says Alaska has no choice.
“It’s time that we touched that third rail,” he told the trustees, and told them they’d be part of the state’s fiscal solution.
“You will be a huge part of making this shift in our economy going forward,” he said.
Walker kicked off the discussion of use of the Permanent Fund with a proposal to spend it, but got Alaskans’ attention to the seriousness of the issue by vetoing about half of last year’s dividend amount.
He later acknowledged that he’d done more than just touch the third rail.
“I’ve been hugging it,” he said.
Walker and Mallott said the Permanent Fund was going to be just one of the parts of a solution to the state’s fiscal gap, however.
“It’s very necessary that we have additional revenue sources, and of which we ourselves are responsible for paying for government services that are provided to us and our children,” Mallott said.
That’s going to put new expectations on the fund and its managers when the fund’s earnings are being counted on to pay for state services, he said.
“It ain’t going to be all about the dividend anymore,” Mallott said.
Later, Sen. Kelly met with the trustees, and offered some push back to the possibility of the trustees getting involved in political questions, highlighting possible differences between the legislative and executive branches about use of the fund.
“We appreciate so much that this board, in particular, are not political agents,” he said.
The trustees, however, have gotten involved in the question of spending the fund in the past, including as a board endorsing former Gov. Frank Murkowski’s “percent of market value” approach for restructuring the fund more than a decade ago, during a previous fiscal crisis.
High oil prices and a new oil tax system led to waning interest in Murkowski’s POMV, but by the time that fiscal crisis had ended Murkowski has been voted out of offices, placing third in a Republican primary in 2006 that was won by Sarah Palin.
Board chair Bill Moran indicated that he wanted others to deal with the political quesions, while the trustees focused on managing the permanent fund.
“We’re here for the people of Alaska,” he said. “Give us the charging orders and we’ll move ahead with them,” he said.
• Pat Forgey is a freelance reporter based in Juneau.