This year's Alaska Permanent Fund Corporation annual report arrives with a reminder on the inside front cover of one of the core facts of Alaska's economic future: While oil revenues are falling over time, Permanent Fund income is rising. The question is what to do with that fact.
So far, we Alaskans have traded our ownership share of oil in the ground for government services, money invested and money in our pockets. We get a lot of services we don't pay for because we pay virtually nothing in state taxes. We've invested in our Permanent Fund -- and have about $25 billion to show for it, even though, like most everyone else, we've taken a beating in the market this past year. And we pay ourselves a handsome dividend out of earnings from the fund -- an idea that remains unique in the world.
But the balance is tipping unavoidably in our fiscal world. Here's what jumps off the page of the Permanent Fund report: During the first 25 years of the Permanent Fund's existence up to today, Alaska took in $55 billion in oil revenues and $25 billion in Permanent Fund income. During the next 25 years, those numbers are projected to turn around entirely: Oil revenues are projected at $20 billion and fund income at $75 billion. The shift is even more dramatic if you use inflation-adjusted dollars rather than nominal dollars.
You can draw many conclusions from those figures, but the most important one is overwhelmingly simple: Something's got to change. Either we consider using fund earnings in other ways or we beggar the opportunities of the future. If we're not prudent about it, we'll wind up doing both.
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