Statehood Act

When Alaska became a state in 1959, its population was small. At barely over 225,000 (45,000 Alaskan Natives), it became the least populous state in the nation. One of the primary arguments against statehood for Alaska was that it was too small to support itself. Congress thought that such a small population could not generate enough tax dollars to pay for state government and services. So, Congress included two measures in the Statehood Act to establish the new state on a stronger fiscal foundation.

The first measure involved transferring the ownership of federal land to the new state. When the U.S. purchased Alaska in 1867, all the territory's land became public domain. Nearly 100 years later, in 1959, the federal government still owned 99% of Alaska's 375 million acres of land. In the Statehood Act, Congress said that the State of Alaska could select 104 million acres from the unreserved and unoccupied federally owned land in Alaska. Under this provision, 28% of the total land in Alaska would be transferred to the state. Congress assumed that as the state's land became economically valuable through development or settlement, it could earn enough revenue to fund the government. This has largely come true because of the discovery of North America's largest oil deposit at Prudhoe Bay in 1967.

The second measure also involved federal land. After giving the new state 104 million acres, 60% of the land in Alaska - 225 million acres - still remained federal land. However, to help the new state support itself, the federal government promised to give the state 90% of the profits from mineral lease sales on this federal land. Oil is one of the most important minerals in Alaska, and to this day, wherever oil or gas leases are sold for exploration or development on federal land, 90% of the revenue is given to the State of Alaska.

Everything seemed in place for the efficient functioning of the new state government. Alaska seemed to be off on the right foot. However, a huge challenge to state leadership was already brewing, threatening economic development in the state and delaying the selection of the state's 104 million acres for many years. While Congress had made Alaska a state and granted it a large portion of the land, it also created great confusion by ignoring the claims of Alaska Natives to their Alaska land.

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