Governor aims to link permanent fund investments to in-state development

Posted: Monday, January 27, 2003

Gov. Frank Murkowski wants to use the muscle of the Alaska Permanent Fund's $23 billion investment portfolio to open corporate doors for Alaska.

In what would be a significant policy shift, Murkowski said he will appoint members to the board of trustees willing to leverage the power of the fund to attract jobs to Alaska.

"We would like to invest in companies that invest in us," said John Manly, the governor's press spokesman. "What's wrong with that?"

Democrats say there is plenty wrong if the governor intends to influence how permanent fund managers invest money that ultimately results in millions of dollars in annual dividend checks to eligible Alaskans.

Senate Minority Leader Johnny Ellis, an Anchorage Democrat, said politicians who wander into the path of the permanent fund could make political decisions that ultimately impact dividends.

"That raised a sense of alarm in me," Ellis said.

The Republican governor, who took office in December, will make several appointments to the fund Board of Trustees in the coming months.

During an address to a joint session of the Legislature on Thursday, Murkowski said the state must be more aggressive in leveraging its investments. He said his board appointees will help the state begin "a dialogue" with companies whose stocks the fund purchases.

"While we want the permanent fund to make good sound investments, there's no reason why we shouldn't direct attention to those companies willing to provide jobs and invest here in Alaska," Murkowski said.

The governor gave no specifics on how that policy would affect future investments to the permanent fund.

Fund Executive Director Robert Storer said Friday the policy directive should not affect investment decisions made independently by fund managers.

"I think you have to be mindful of your fiduciary responsibility," Storer said.

A former trustee said the idea is less ominous than it sounds.

Marc Langland, chief executive officer of Northrim Bank who served on the board in the late 1980s, said such a proposal has been discussed privately among board members before.

Top corporate executives mulling an expansion would be more willing to meet with a shareholder than a state official who does not invest in their companies, Langland said.

It gets Alaska in the door of the board rooms, and that's all, he said.

"It's kind of a no-brainer," Langland said. "It still doesn't guarantee you anything, but at least it gives you an opportunity."

Despite the large stock portfolio, the fund doesn't invest enough in any one company to sway a corporation's decision, Langland said. "Obviously, it's not always going to work."

Minority Democrats in the Legislature want the governor to more clearly assure them that politicians aren't going to be making investment decisions. Ellis said he fears the move could be a small step toward politically micromanaging the fund.

"I think most Alaskans would prefer to have the professional money managers more involved and politicians less involved," Ellis said.

Storer said fund staff joined state officials in one meeting with Intel Corp. executives. But the fund never has actively sought concessions from companies it invests with, he said.

In past years, legislators have debated what role the state should take in influencing investment decisions in the fund, Ellis said.

Democrats in the mid-1980s backed legislation to dump fund stocks held in South African companies as a protest to apartheid, Ellis said. Similar debates have flared over investing in tobacco companies.

The fund, which last year paid $1,540 to more than 590,000 Alaskans, has flourished because it has been largely immune from snap political decisions, Ellis said.

"I don't mind a 'dialogue,' " Ellis said. "But it feels like Gov. Murkowski intends to more aggressively become involved in the management of the permanent fund."

The governor's spokesman said that's not the intention.

"We set up the direction we would like them to go and we let them do their job," Manly said.

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