The People of Alaska vs The Legislature
Part IX: The Constitutional Trust Relationship: The State as Trustee, The People as Beneficiaries
By Michael Tavoliero
Alaska’s Constitution establishes a public trust framework for natural resources and their proceeds. Article VIII, § 1 declares that natural resources “are to be utilized, developed, and maintained for the maximum benefit of the people.” The phrase “the people” is not rhetorical; it identifies the beneficiaries of the trust. The State, in turn, is assigned the role of trustee, obligated to manage resources and proceeds in the beneficiaries’ interest.
Alaska State Constitution
This fiduciary structure is affirmed in several constitutional mandates:
- Article VIII, § 2 requires that resource policy be directed to benefit the people as a whole.
- Article VIII, § 4 requires sustained-yield management to prevent waste and preserve lasting benefit.
- Article VIII, § 12 authorizes leasing of resources but does not authorize alienation of beneficial ownership.
- Article IX, § 15 establishes the Permanent Fund to retain a portion of resource revenue for the people in perpetuity.
The Permanent Fund is therefore not general revenue of the State. It is a sovereign trust corpus, constitutionally created, and dedicated to a defined class of beneficiaries: Alaska citizens.
This aligns with other trust responsibilities the State is required to honor, such as the Mental Health Trust lands, University and municipal trust lands, and numerous federal–state resource compacts, where the State is not free to treat trust assets as discretionary revenue or to divert them to unrelated governmental purposes.
Alaska Caselaw
In each context, Alaska caselaw holds that when the State administers property dedicated to a specific beneficiary class, it must preserve the corpus, protect the income for the beneficiaries, act with loyalty and neutrality, and restore assets if they are misapplied. The Permanent Fund fits squarely within this family of constitutional and statutory trusts: it was created to preserve nonrenewable resource wealth in perpetuity and to distribute the ongoing income from that wealth to the beneficiaries identified in Article VIII, the people.
Just as the State may not raid school trust lands for general spending, may not divert Mental Health Trust assets to balance a budget, and may not privatize tidelands in ways that impair public rights, it likewise may not convert Fund earnings into unrestricted general revenue merely because it is politically expedient. The Fund’s earnings, like the earnings of any trust corpus, remain trust income. The beneficiaries, Alaskans, possess the equitable interest. And the State, as trustee, owes fiduciary duties of prudence, loyalty, care, and impartiality in administrating those earnings.
The Permanent Fund Dividend is the mechanism through which the State has historically discharged those duties by returning a portion of the trust’s income to all beneficiaries equally. When the State diverts income to fund general operations, it treats a sovereign trust like a savings account; something Alaska’s courts have repeatedly rejected in every other trust context.
In this way, the Permanent Fund is not an exception but a continuation of the State’s longstanding obligation as trustee with responsibilities to protect the corpus, to direct income to the people, and to resist repurposing trust assets for itself.
State v. Weiss
In State v. Weiss, the Alaska Supreme Court held that where the State holds assets in trust for defined beneficiaries, it must preserve the trust corpus and may not unilaterally redesignate or remove assets for its own fiscal convenience.
The fiduciary nature of the State’s obligation is defined by these Alaska Mental Health Lands Trust cases. There, the State diverted resources dedicated to a trust purpose into unrelated governmental expenditures. The Supreme Court held that such diversion violated the State’s fiduciary obligations and required restoration of both the trust corpus and the trust benefit. See State v. Weiss
The court confirmed three controlling principles:
- The State is not the beneficial owner of trust assets. It holds them in fiduciary capacity.
- Beneficial interests cannot be unilaterally diminished for general revenue use.
- When the State diverts trust income or fails to distribute trust benefits, the remedy is restoration, not discretion.
The Principles Compromised by a Reduced PFD
The Permanent Fund Dividend, as a distribution of trust earnings to the constitutionally identified beneficiary class, falls squarely within this framework. While the corpus of the Fund itself is constitutionally protected, its earnings, once realized, are held for the benefit of the people, not for the expansion of government operations or to relieve appropriations pressure elsewhere.
Thus, when the State:
- Withholds or reduces the Dividend to finance government spending, or
- Treats Permanent Fund earnings as general revenue rather than trust income, it breaches its fiduciary obligations to the beneficiary class.
This breach is not procedural, but structural:
| Trust Principle | Result of Reduced PFD |
| Beneficiaries must receive trust income: | Denied |
| Trustee must not divert purpose of trust assets: | Violated |
| Trustee must act with loyalty to beneficiaries: | Compromised |
| Trustee must preserve both corpus and benefit: | Breached |
The State’s shift from the original statutory formula to a politically manipulated, annually appropriated Dividend is tantamount to taking beneficiary income for discretionary use, contrary to trust doctrine.
This breach triggers two well-established remedies under Alaska law:
- Restoration of the diverted benefit (as in the Mental Health Trust cases), and
- Judicial confirmation of the beneficiaries’ possessory right, analogous to quiet title where beneficial possession is long-settled and legally recognized.
Conclusion
Alaska’s Constitution and Supreme Court rulings establish that the Permanent Fund and the Permanent Fund Dividend are not merely fiscal tools; they are components of the State’s public-trust system. Article VIII identifies the people, not the government, as the beneficiaries of Alaska’s resource estate, while Article IX, § 15 creates the Permanent Fund as a trust to preserve a portion of that estate for residents in perpetuity.
When the State administers assets for a defined beneficiary class, it must observe its obligations as trustee. Because the Permanent Fund holds citizen resource wealth, and PFD earnings are directed to constitutionally defined beneficiaries, these programs are subject to Alaska’s public-trust doctrine. When the State re-directs Fund earnings to finance government operations, it does not exercise ordinary budget discretion—it breaches the fiduciary duty imposed by Alaska’s constitutional trust structure.
The Great Debate Complete Series
Check out previous articles in The Great Debate: The People of Alaska vs the Legislature:
Part I: Inflation-Proofing: Where’s the Problem?
Part III: The 49 Forward Plan Takes the Permanent Fund Backwards
Part IV: The PFD and the Search for Wisdom
Part V: Ghost Busting: Dispelling Anti-PFD Phantoms
Part VI: The People’s Possession: Alaska’s Ownership of the Permanent Fund Dividend
Part VII: The People’s Constitutional Covenant and the Quieting of Title
Part VIII: The Constitutional Intent of Alaska’s Resource Wealth
Remember: Crime Boss Dunleavy will appoint only people that will lie for him or carry out illegal activities in the name of the law. it doesn’t matter what they wear, appear to say but the end result is the same. If you lie for the Crime Boss Dunleavy, you are his friend and he will go to extreme lengths to use you again and again.
I agree with the points outlined in this segment of PFD. The State must return funds which have been inappropriately appropriated to the general budget. These funds should be returned to the earnings account and held for consideration to directly benefit the Beneficiaries, either by movement to the corpus of the fund or for distribution to the beneficiaries or a combination of both.
If I sue for the violations by the State regarding the PFD, would you be my lawyer? You have laid out the best arguments I’ve seen. I haven’t been able to find a lawyer that would take this on. I even wrote the ACLU about it (and of course, they didn’t care to take it on).
I worked as a legal secretary and court transcriptionist for almost 20 years, but that was 30 years ago. Pretty sure I can still manage to type of any required documentation.
I must say, however, I’m not sure how we can remedy the last 9 years of having our funds stolen unless such funds can be made up via income from the LNG. Do you have any thoughts on that?
Thanks for all your hard work in bringing these views to the public. It is greatly appreciated.
The US Constitution and the Alaska State Constitution means nothing to rogue judges and the “bought and paid” for corrupt political class in the state and federal level.
The state politicians are stealing our PFD from us.
Thanks for the wordy articles.
It’s time to start calling out ALL of the judges, politicians, and lobbying groups – BY NAME – that came up this idea, promoted the idea, and pushed through the idea to STEAL our PFD.
These financially reckless politicos need to live within our means.
We have to start drawing the Line somewhere.
We need radical change and ideas.
So when does Walker go to prison? And all the legislators for engaging in complicit behavior?
Thank you. Interesting. With both parties spending like never before how will establishment parties react to this? Sure Walker did harm. As did every repub and dem in the Juneau Cabal.
I suppose its more important to note how will Alaskan Voters react?
My guess, they’ll hold their breaths, remove their logic organ, dismiss their conscience, and vote along party lines. The uniparty solution.
Minnesota Somalis are amateur, compared to Alaska elected officials.
Step out of line and the Man will come and take you away. Just ask Mary Fulp of Palmer.
I see a typo in the above article which says:
“Article VIII Section 13 authorizes leasing of resources but does not authorize alienation of beneficial ownership.”
I think he meant “Section 12”. But I see no mention about “beneficial ownership”.
Another typo involves “Article VIII section 15”. Article IX section 15, is about the establishment of the Permanent Fund. But I see nothing there indicating “to retain a portion of resource revenue for the people in perpetuity.”
The article then says:
“The Permanent Fund is therefore not general revenue of the State. It is a sovereign trust corpus, constitutionally created, and dedicated to a defined class of beneficiaries: Alaska citizens.”
But Article 9 section 15 says: “All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.” When this amendment was added to the constitution in 1976, it was intended that the earnings of the Permanent Fund would help support government spending when the oil flow ran low, far in the future.
It wasn’t until 1980 that the legislature passed a law establishing a dividend program. This is because there was a lot of surplus money at the time.
Hello Randy, thank you for commenting! The typos have been fixed.
Admittedly, this topic is not my area of expertise. So, I took the time to reach out to our team to provide an answer to your critiques. Here are some thoughts for your consideration:
1. Re Article VIII, Section 12: the author is pointing out here that Section 12 only authorizes leasing of minerals, not the sale of them. You are correct that the statute does not explicitly say “beneficial ownership.” The argument is that Alaskans have beneficial ownership that is proven elsewhere, mainly Article VIII, Section 1.
2. Re Article IX, Section 15: the phrase ““to retain a portion of resource revenue for the people in perpetuity” is a well-supported and shared opinion based on the argument as a whole, not just this particular statute. It is not meant as a direct quote of the constitution.
3. Re the purpose of the Permanent Fund: Article 9 section 15 says: “All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.” The key here is the clause “unless otherwise provided by law.” This indicates that there are laws that regulate the government’s depositing of the income into a general fund.