The People of Alaska vs. The Legislature
Part VIII: The Constitutional Intent of Alaska’s Resource Wealth
By Michael Tavoliero
Alaska’s Constitution establishes the State’s natural resources within a public-trust framework. Article VIII directs that resources “belonging to the State” must be “utilized, developed, and conserved for the maximum benefit of its people” and that replenishable resources must be managed on the sustained-yield principle (VIII, §§ 2, 4). Although the Constitution recognizes State ownership, it also imposes a constitutional duty: resource wealth must be administered for the benefit of the people. In this sense, Article VIII defines a trustee-beneficiary relationship in which Alaska’s citizens are the beneficiaries of the State’s resource management.
Alaska Supreme Court Enforces Trustee-Beneficiary Structure
The Alaska Supreme Court has enforced this fiduciary structure. In State v. Weiss, 706 P.2d 681 (Alaska 1985), the Court held that when the State holds property in trust for a designated beneficiary class, it is bound by traditional fiduciary duties. The State must preserve the corpus, use trust assets exclusively for trust purposes, and restore the value of trust property if it is diverted or diminished. The Court reaffirmed these principles in Weiss v. State, 939 P.2d 380 (Alaska 1997), concluding that trust assets cannot be reassigned for the benefit of the State or its general budgetary interests when that reassignment harms the trust’s designated beneficiaries.
The Permanent Fund, created by Alaska Constitution Article IX, Section 15, operates in this same moral and structural context. The amendment dedicates a portion of mineral revenue to an inviolable, income-producing principal, establishing a mechanism to convert one-time resource extraction into a renewable, intergenerational asset. Although the Constitution provides that Permanent Fund income is subject to appropriation unless otherwise directed by law, that income is nevertheless derived from the same resource wealth Article VIII requires to be managed for “the maximum benefit of the people.” While the Legislature has constitutional authority over appropriating earnings, those earnings originate from assets held for the people’s benefit and carry the public-trust expectations surrounding all resource wealth.
The State’s Decline from Responsible Trustee to Money Grabber
For more than three decades, the Permanent Fund Dividend (PFD), authorized by AS 43.23.025, served as the State’s method of distributing a portion of realized earnings to the beneficiaries— the people of Alaska. During this period, the Legislature consistently followed the statutory formula and exercised its appropriation powers in a manner aligned with public-trust principles. The State treated earnings as belonging to the people and as something distinct from general governmental revenue. This uniform practice reinforced the understanding that the Permanent Fund exists to share resource wealth with the citizen-beneficiaries, not to subsidize government operations.
The fundamental break occurred with the enactment of the Percent-of-Market-Value (POMV) draw in 2018–19, which began treating a fixed share of Permanent Fund earnings as unrestricted general revenue to support ongoing state government operations. Under this approach, the State shifted from acting as a trustee to acting as a competing claimant for Permanent Fund income. From a resource-trust perspective, this represented a reordering of priorities: rather than protecting trust income as belonging to the people, the government adapted for its own spending. Although the courts have not yet applied the Weiss fiduciary framework to the Permanent Fund, the similarities are unmistakable. In the Mental Health Trust cases, the Court condemned the State’s use of trust assets for general governmental purposes at the expense of the beneficiaries. The POMV approach creates an analogous tension between beneficiaries’ interests and government self-financing.
In a resource trust, the State’s discretion ends where the beneficiaries’ property interest begins. The State may manage, invest, and steward trust assets, but it may not treat the beneficiaries’ share of trust income as its own.
Getting Back on Course
From 1982 to 2016, the State’s administration of the Permanent Fund generally reflected this principle. The principal of the Fund was never used to support government spending. Government operations and the PFD were funded solely from realized earnings held in the Earnings Reserve Account, preserving the legal distinction between principal and income. During this period, the State also routinely inflation-proofed the Fund, protecting its long-term value; precisely the kind of intergenerational stewardship expected of a trustee managing assets on behalf of present and future beneficiaries.
The Framers of the Alaska Constitution intended resource wealth to secure the freedom and prosperity of the people, not to subsidize the institutional needs of the State. For more than three decades, Alaska honored that principle with remarkable discipline. Reasserting the people’s beneficiary interest is not radical; it is a return to first principles. If Alaska is to remain a state where citizens, not government, own the resource wealth, then the Permanent Fund must once again be managed, protected, and distributed as the trust the Constitution envisions.
The fight over the Permanent Fund is not about numbers on a spreadsheet. It is about the meaning of Article VIII, the character of Alaska’s democracy, intergenerational fairness, the proper limits of government power, and whether our children inherit a resource trust or a depleted government account. If we treat the Fund as political revenue, it will disappear into the State budget like every other revenue source before it. If we treat it as a trust, it will last forever. This is a choice Alaskans must face.
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
Excellent series of articles Michael. A road map back.
I agree.
Unfortunately many of the states politicians are not willing to do their jobs and use the PFD as the easy way out. Unfortunately the Alaskan’s doesn’t seem to recognize this.
In 2016, the Alaska Supreme Court erred.
This author seems to be advocating going back to the so called “full dividend” formula. Although i agree that using permanent fund earnings for gov’t spending makes it politically easier to retain high spending levels and that that is a bad thing, the problem with this proposal is that income taxes will be implemented to fund gov’t. Taxing income people get from hard work just to pay dividends to people for doing nothing other than managing to live in Alaska for one year seems unfair to me.
I think the safest way for us and the state to go right now is to just continue to do what we’re doing.
It could be that the current formula is not the way forward, but that requires changing the Statutes, if things are going to be done properly. The earnings from the Permanent Fund are to go into the General Fund, unless otherwise provided by Law. A draw based on a running 5 year average of the Earnings (from the ERA ,Earnings Reserve Account), levels out the available amount like no fixed POMV can. Inflation proofing of the Principal, the annual Dividend, and Gov’t Expenditure all need to be considered. An argument has been made that “unrealized gains” have resulted in Double Inflation proofing in the past. So, flexibility is needed. The earnings based on a running 5 year average, seem to me be the best way to decide what is available for Dividends and Expenditure, after provision for inflation proofing. If Dividends are to be reduced, then let the Legislature make its case before the People. If a 50/50 split in not equitable, then make the case for it to be otherwise. Recently, I saw that a figure of 1% was considered to be all that the Gov’t could afford, out of say a 5% POMV draw. But the first thing that needs to happen is for the Statutes to rule, as stated in the State Constitution. Until that happens the PFD will soon be history.