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.
Great piece, Joe. If Alaska can avoid yet another crap republican governor there’s a good chance that the legislature could repeal SB21 without fear of a veto.
You do realize the people of Alaska upheld SB21 in 2014 by voting down Ballot Measure 1 right? Maybe you weren’t here in the state back then but that was a thing and it happened – but now you’re gonna cry foul that it was a false election and stolen and that the vast majority of Alaskan’s feel the way you do that we need to tax more from the big, bad, oil companies right?
John didn’t speak to any of that.
John wrote about what the next legislature might do with SB21 once Dunleavy’s out of office.
Anything to say about what he actually wrote?
Oh you’re john, I get it now.
By referencing what the legislature (which represents the people) might do to a law that’s been in place since 2013 and was upheld a year later by initiative, that is completely relevant to what “john’s” original comment was.
Again, everyone on here knows reading comprehension isn’t your strong-suit Dan, you don’t have to keep proving it over, and over again…
No, John was talking about what the legislature might do with SB21 once Dunleavy’s out of office later this year.
Given 13 years of experience under SB21, he may be right that our legislators may be inclined to repeal it once a new governor takes power.
Anything to say about what John actually wrote?
“………Anything to say about what John actually wrote?……..”
If I do, I bet you and john would like it even less than Don’s comment, so I’ll pass. No need to deal with “mights” from the nosebleed section at this point.
Dan, I’ll bet you my entire retirement that a new Governor next year will have NO effect on the Legislature repealing SB 21, mark my words, screenshot this comment, do what you need, it’s not going to happen.
This is a pro-resource development state, and we get more than our “fair share” of taxes from industry to justify it as much, if it were so patently unfair, then it would’ve been repealed in 14′ when it was on the ballot and the Legislature would’ve passed a bill and overridden the Governor’s veto by now.
Unfortunately, the Legislators in Juneau do not represent a large number of those who live in the State. The special interests, depending upon which union, private and especially GOVERNMENT employee unions, control those in Juneau.
While Alaska individually votes Republican (last election for President and those in DC), the Rhinos (Republicans in name only) have given the State to the Democrats to form the ruling coalition and run the State.
The Rhinos know who they are by their votes in Juneau. But the Rhino’s DO NOT represent the people who vote Republican.
Since the Territory days, it turns out. Don sounds like one of those guys who thinks each PFD payout comes from oil revenue collected the year before. I still see bumper stickers around town that say “Like your PFD? Vote NO on 1.” They got no idea.
You sound like one of those guys who thinks energy to power an economy comes from rainbows and unicorn farts – tax development till the cows come home and turn the state into a state park with no resource devlopment right? Thats the end goal.
“………I still see bumper stickers around town that say “Like your PFD? Vote NO on 1.” They got no idea……..”
Ditto the folks still crying for $3K annually despite the Supreme Court throwing that out almost 10 years ago. Either they don’t have a clue, or they don’t care and are only crying for the cash like toddlers crying for the candy they see at the store check out line.
Dunleavy got himself elected twice by appealing to the very toddlers you refer to. It’s the Rs that feel entitled to a big PFD check.
They’re all doing it, and it works like a charm, so get used to it. The PFD payday is the new “subsistence” bullshit. We’ll be fighting over it until the fund is as gone as the Nelchina caribou herd is today. There’s your romantic “subsistence” lifestyle destiny; most of the planet is sneaking across the border to escape the Paleolithic era, and you folks want it enshrined into law, just like “statutory dividend”. The parasites infect both parties. It’s a bipartisan disease. It’s called “greed”.
In Fairbanks, Bob Brinker was a popular financial radio host for many years. He, and other experts saw 4% as a reasonable annual draw for funds such as these. 5% was indeed too much, but suddenly dropping to 3% is not practicable. It would cause too much immediate economic stress.
“It would cause too much immediate economic stress.“
You do realize that statement implies that we as a state are so heavily reliant on the government that any major cuts or restructuring of govt. services provided could result in “economic stress”, do you understand how absurd that is and how broken we are as a state for that to be the case?!?
Maybe it’s absurd.
But it’s definitely true.
Had Congress in 1958 seen how incapable Alaska is of responsibly supporting itself in 2026 (despite an unforseen bonanza of oil squirting out of the ground, Beverly Hillbillies style), we’d still be a territory (if that).
The U.S. granting us statehood isn’t the issue – they saw that we had resources to use to sustain ourselves, we did, we built a sovereign wealth fund out of those resources worth over $60 billion. What the issue is, is that we built up a govt. and partial portion of society reliant upon it to live and haven’t made the tough decisions to cut off those funds and services and got ourselves in the situation we’re in. A state whose economy is reliant on the government spending a certain amount of $ each year is no state I emvy… Read more »
If you are an Alaskan, you are already a resident (states don’t have “citizens”) of the state whose economy, bar none, is the most reliant on government spending in this nation.
“Alaska is the most federally dependent state, as over 50% of the state’s revenue comes from federal funding.”
– Wallethub, 3/10/25
Fire up your U-Haul, you’re moving to New Jersey!
Honing in on minute word play… wow.
We’re talking past each other and saying the same thing Dan – no one’s disputing AK relies on state and federal spending way too much and more so than any other state, I think the issue is that YOU don’t think that is a bad thing or find it detrimental in theory, I do. Get to where I’m at and we can have an honest conversation then.
And if I move to New Jersey, I’ll be sure to stop by Nevada and say hi to you since that’s where you live right now!
“YOU don’t think that is a bad thing or find it detrimental in theory” -Danny Nelson I’ve written nothing about whether I consider Alaska’s exceptional level of government spending a good or bad thing. You’ve expressed an opinion. You wrote: “A state whose economy is reliant on the government spending . . . is no state I emvy [sic] to be a citizen of . . . .” I, by contrast, have not expressed any opinion on that. All I’ve said is that Congress likely would have never approved us to be a state if it knew how utterly dependent… Read more »
So nothing to say or refute about me calling you out for being a current resident of Nevada and not Alaska, even though all you do is insert your unwanted opinions on these Alaska-based media sites?
“……..If you are an Alaskan, you are already a resident (states don’t have “citizens”) of the state whose economy, bar none, is the most reliant on government spending in this nation……..” There are significant reasons for that. First, Alaskas has (by far) the highest percentage of native Americans of all states as residents, which equated to a high public health bill. Secondly, Alaska has (again, by far) the most classified federal lands in the nation, which (again) equates to a big management bill. Thirdly, Alaska is as forward military outpost-turned-state, which is an astronomical bill, and it is guaranteed to… Read more »
Bob Brinker was a national host. His advice isn’t relevant here.
He advised mortal humans. People who stopped working and could be counted on to die.
States like Alaska have perpetual existence, and the tax revenue they generate tends to increase over time.
Good advice for humans, irrelevant for states.
“ Norway is doing well with its wealth fund; Alaska hasn’t done so well.”
Hmmm… I wonder why? Could it have something to do with the fact that Norwegians are taxed 23% more than Americans? Could actually paying for services have something to do with fiscal responsibility?
More like Norway didn’t write an $8/bbl subsidy into their oil revenue laws.
Norway’s production tax is high at 78%………, but since 70% of their oil is produced by Equinor, and the nation of Norway is the majority owner of Equinor (67%)……….guess what that means?……….
“…….70% of their oil is produced by Equinor, and the nation of Norway is the majority owner of Equinor (67%)……….guess what that means?……….”
As if on cue, Michael Dukes reports that Bill Wielechowski has proposed “nationalizing” the oil & gas producers in Alaska, as if that has worked anywhere on Earth to accomplish anything other than economic disaster, or as if that would fly with a federal government that controls the vast majority of Alaska’s oil & gas producing lands and waters.
looked everywhere online can’t find anything like this Michael dukes saying bill w did that. your a liar
https://www.michaeldukesshow.com/podcasts.html
Thursday 2/19/26 – Headlines – School Closures – OversightLIVE’s – Ben Carpenter
Sorry. I’m not a liar. Your reference has been provided. Maybe your research skills need honing?
“………Hmmm… I wonder why?……..”
It might also be partly because Norway has complete control of their situation and doesn’t have a Washington DC in ultimate control, or 340 million potential immigrants to flood in from other states to enjoy the largess. Our population has doubled since the beginning of the oil flowing.
Using the Norwegian example isn’t quite sufficient, pointing to its 3%. Recall that citizens in Norway also pay considerable taxes. they don’t rely solely on drawing on those earnings. Like the author, i too oppose combining the accts, doesn’t take a rocket scientist to understand the long term consequences. The sadder thing, Joe, is that, all the sincerity those permanent fund fathers had in creating the fund, and it’s hope that it would last for future generations to benefit from a one time resource owned in common by all generations, its turning out they missed the mark by using the… Read more »
Joe, let’s shed the light of day on our Alaska Permanent Fund. Board (APFB). Please read our Facebook Group: “Alaska Permanent Fund Board Confirmation Committee” https://www.facebook.com/groups/630155036690688 with the signatures of the astronomical “Individual Investment Transaction Disclosures” which were investments in the Stock Market of William G. Moran, Jr., owner, First Bank Ketchikan while a member and chair, Alaska Permanent Fund Board, for over SIXTEEN years 2006-2022. As you referred to in your article, Joe, our Alaska Permanent Fund is worth $88,844,500,000 or almost $89 Billion as of 2-17-26 begun in 1976 and the Norway Sovereign Wealth Fund, Government Pension… Read more »
“………our Alaska Permanent Fund is worth $88,844,500,000 or almost $89 Billion as of 2-17-26 begun in 1976 and the Norway Sovereign Wealth Fund, Government Pension Fund is worth $2,200,000,000,000 or $2.2 Trillion begun in 1991, Alaskans have to know APFB is NOT managing our money well………” The management of the fund isn’t why it isn’t much larger today. In the history of the fund, it has generated over $93.7 billion in total net realized earnings, with over $51 billion (55%) used for dividends, inflation-proofing, and state services. Had that $55 billion been reinvested in its entirety, there would have been… Read more »
I bet Alaska landmine’s most comment contributors: Jon, Don, John Savatass, Reggie Taylor, Ari bilk are boomers who all sip coffee at such places as Kaladis while passing their time by thinking they know everything. Because Joe Paskvan’s contribution it was a realistic and thoughtful opinion piece that All Alaskans should be considering if you want to continue staying on Alaska without eventually personally going broke. Boomers here only care is that they don’t lose the retirement savings and benefits before they die, while GenX and millennials care to make enough to leave Alaska and live comfortably on lesser expensive… Read more »
“……..boomers who all sip coffee at such places as Kaladis while passing their time by thinking they know everything………”
Never been to Kaladis. Have you? Got a mirror? I drink two cups of Kirkland drip per morning, brewed myself, with a half teaspoon of honey each from hives on my property. I’m not paying $10 for a cup of coffee.
Obviously you aren’t a Boomer. Sorry your life didn’t work out as you planned or hoped, but I didn’t do it to you. Remember, the first Boomer elected to the White House was Bubba. Catch that clue if you can……………
To be honest
If Boomers had experienced the same thing that happened to WW1 senior adults in 1929 where they lost everything: all retirements, life savings, benefits, homes, cars, the loss probably will do Boomers, GenX, and GenY or millennials all a world of good while teaching GenZ, GenAlpha, and GenBeta conservative skills, humility, and faith. The only reason financial catastrophe hasn’t come, yet, is because of God’s grace and long patience to give us time to getting our heads, minds, and hearts right with him
Apparently you were in the same condition in 2008 or 1985 as you are in today. In South-central Alaska in the mid-80’s, there was a severe depression here. Empty homes everywhere, especially Mat-Su. The Alaska Housing Finance Corporation was sent through the cleaners. 2008? Nationwide real estate crash……..even huge international losses. Where were you? In kindergarten?
And how much would the corpus be at if we had drawn the same amount and been invested in the S&P instead (like is recommended for your 401K) for the last 40 years and were not paying an incredible amount for it to be “managed” and consistently average lower returns than the market in general. Would be an interesting graph for Brad to look into. Nothing like paying people to make less than a simple low fee index fund.