Alaska locked oil windfall in a fund, paid dividends to voters

Alaska's 1969 lease sale on the newly discovered Prudhoe Bay field brought the state a record $900 million overnight. The Legislature spent it on capital projects almost as fast as it arrived, and the Trans-Alaska Pipeline that would produce ongoing royalty revenue was still years from completion. Brookings Institution-hosted citizen retreats in late 1969 debated what to do with the money, but no binding mechanism came out of them.

By 1975 Governor Jay Hammond was warning that the pattern would repeat at a much larger scale once pipeline royalties began flowing, and vetoed a bill that would have routed a share of royalties into an ordinary state account. Alaska's constitution barred dedicating state revenue to a specific purpose, so protecting any of it required amending the constitution itself and putting that amendment to a statewide vote.

Hammond's 1976 constitutional amendment required at least 25% of mineral lease rentals, royalties, and bonuses to be deposited into a new Permanent Fund the Legislature could not spend through the ordinary budget process; voters approved it 75,588 to 38,518. The Fund took its first deposit, $734,000, on February 28, 1977. In 1980 Hammond signed the law creating the Alaska Permanent Fund Corporation, with an independent six-member Board of Trustees to manage investment of the principal at arm's length from the Legislature. That same year, the Legislature separately approved a Permanent Fund Div