Despite being a petrostate, Alaska is in economic trouble. Despite constitutional establishment of Alaska’s Permanent Fund protecting our principal, our spendable buckets of savings have steadily declined.

Despite knowing our buckets are near empty, radical political forces gather to open another bucket – our Permanent Fund’s principal. Thankfully, the principal is constitutionally protected; it cannot be spent by anyone… unless we, the voters, give our leaders the ability to do so. Forces want you to allow them to spend the principal; but your vote can stop them from eliminating constitutional protection of our principal.

Keep the Permanent Fund permanent. Protect the Fund’s principal.

Why have savings declined? A 5% drawdown for POMV [percent of market value] from Alaska’s Permanent Fund is the culprit in creating the risk to the Earnings Reserve Account [ERA]. Five percent of our Permanent Fund has been taken since 2019 from the ERA to pay about 60% of Alaska’s bills.

What is the risk to the ERA that I raise? Overspending from the ERA bucket leads to its depletion. Alaska’s 5% drawdown rate is much too large. If depleted, Alaska is out of spendable money. That’s an enormous problem. The solution? Reduce the 5% to 3%.

Consider Norway’s wealth fund [$2,000,000,000,000- yes trillions], it follows a 3% drawdown rate. Their national economy thrives while providing generous social services. Norway is doing well with its wealth fund; Alaska hasn’t done so well.

What is the direct consequence of reducing the drawdown from 5% to 3%? Alaska’s Permanent Fund would remain permanent and the risk of overspending from the ERA is effectively minimized. Not overspending solidifies that the Fund would remain a generational fund capable of surviving for many following generations – our children, grandchildren and their children. A permanent Fund.

There is no need to join together the protected principal and its earnings; they are now invested as a single fund. “[A]ll assets attributed across both accounts are invested in a single, comprehensive portfolio.” 2024 Trustees Paper Volume 10 Pg 7. There is no need for any constitutional amendment to combine the Fund’s assets; it is invested as a single fund.

Alaska’s Constitution protects all principal amounts by prohibiting any governor’s budget proposals and/or any Legislature’s passed budgets from spending any principal. But as the 5% system of overspending continued for years, risk of depleting the ERA increased.  

The easy answer is to lower the rate to not overspend from the ERA. The more difficult responsibility is raising revenue to replace the 2% gap between the overspending 5% and the sustainable 3%.

In 2013, did politicians who slashed oil revenue understand they were destroying Alaska’s economy? Possibly not? However, the slashers continue to slash buckets of savings. Now, Slashers want our principal.

The 2024 Trustees Report belittles constitutional protection of the principal inferring they create the “rigid separation between the APF’s Principal (or “Corpus”) and its ERA.” It recognizes “the risk of depleting the ERA has significantly increased in recent years” and “[t]he depletion of the ERA would, therefore, immediately result in a fiscal crisis, affecting both the budget and PFD.” Pg 4. The 3% solution is the answer.

Also raised was “the breakdown of a rules-based framework for inflation-proofing.” Pg 5. Combining the 1) too large 5% and 2) lack of inflation proofing with 3) slashed oil revenue in 2013 means Alaska, in 2026, stands at dysfunction junction, where bad things happen to Alaska and our Fund.

Changing Alaska’s Constitution, something I oppose, is about removing protection of the principal. Rather than look to the mistake of overspending, risk from a 5% drawdown that depletes the ERA, or receiving fair revenue, the changers and slashers have a specific goal – spend the principal. Do not be misled; the changers and slashers don’t look to reduce the 5% drawdown or fix revenue to Alaska; they focus solely upon having the ability to spend principal, our last bucket.

Use your vote to protect our shared legacy. Use your vote to insist our governors and legislatures actually fix our problems. Use your vote to demand that our elected representatives: 1) Reduce 5% to 3%, 2) Consistently inflation-proof the principal, and 3) Fix our revenue system.

Make Juneau work for Alaska’s survival. Do not support those who spend without fixing fiscal problems. Protect our Fund with some PFD and save our educational system, highways, ferries, courts and all that makes Alaska’s government for the people. Vote to REJECT any constitutional amendment removing principal protection. Force elected officials to fix Alaska, before looming fiscal crisis arrives at dysfunction junction.

Born in Fairbanks, Joe Paskvan served in the State Senate from 2009-2013. He holds an undergraduate degree from the University of Alaska, Fairbanks and a law degree from Seattle University School of Law. He is now retired after working four decades as a lawyer.