JUNEAU, Alaska — Researchers are recommending other states look to Alaska’s Permanent Fund to learn how to grow funds supported by natural resource extraction.
The Pew Charitable Trust recently released a national study focusing on seven states that have funds from extraction revenue, which the report describes as “sovereign wealth funds.” KTOO-FM reports (http://bit.ly/2dgyhcr)
The report said Alaska is one of only two state funds with a purpose well-defined by state law. It also identified Alaska as one of only three states that don’t allow withdrawals from the fund principal.
“It’s an outstanding example of a government that had the opportunity to establish one of these funds when the oil industry in Alaska was really just starting up – at least starting up in earnest,” after the Prudhoe Bay oil discovery, said Brenna Erford, a co-author of the Pew report.
Erford also praised the Permanent Fund Corp. board and managers for transparent policies in holding public board meetings and having open financial records.
The report comes as Alaska residents will be receiving smaller dividend checks from the fund this year. The decision to cut the amount by about half from 2015 was made by Gov. Bill Walker because of the state’s multimillion-dollar budget deficit, a situation exacerbated by low oil prices.
Erford said Walker’s plan to use fund earnings for the state budget is about whether Alaskans believe oil and gas revenue will stay low or increase.
“I think that the question for Alaskans is, what do they think the future – in terms of natural resources and the Alaskan economy – what does that look like?” Erford said.
The six other states with sovereign wealth funds are Montana, New Mexico, North Dakota, Utah, Wyoming and West Virginia. In June 2015, the Alaska Permanent Fund had nearly $53 billion, while the other six funds held $16 billion combined.
Information from: KTOO-FM, http://www.ktoo.org