The Permanent Fund

Alaska Constitution Article IX, Section 15. Alaska Permanent Fund:

At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.

The essence of the Permanent Fund is that 25% of revenue from mineral leases and taxes (i.e revenue from oil, natural gas, and mining) will go to a "permanent fund." This money (known as the "principle") can not be spent for any reason. It can "be used only for...income-producing investments."  But while the Permanent Fund Amendment mandated investing a significant portion of the state's oil wealth, it still left a lot of questions for the state government to decide. It is up to the legislature to designate how to invest the principle and also what to do with the earnings these investments hopefully produce.

The first question was how to invest the fund principle. Some Alaskans advocated investing the money directly in the state through a development bank. By focusing on investing in Alaskan projects, the hope was to keep the money in the state to improve Alaska's overall economy and create jobs and opportunities locally. Others advocated for the fund to focus on maximizing the investment profits, even though this meant very little of the investment would be in Alaska. Eventually, the latter strategy won out, and in 1980, the Alaska Permanent Fund Corporation was created with the mission of maximizing return on investment. The majority of the Permanent Fund investments are stocks, bonds, private equity and real estate. As of 2024, the total Permanent Fund value was over $79 billion.

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