Aljaški trajni sklad
The Alaska Permanent Fund (APF) only exists today because Alaska Governor Jay Hammond was obsessed with the idea of dividend-paying social wealth funds.43
Before his stint as governor, during the 1960s, Hammond was the manager of a 2,000-person municipality in Alaska called Bristol Bay Borough. Bristol Bay was teeming with salmon resources, but 97 percent of those resources were being extracted by Seattle-based firms, not local fishermen. The Seattle-based firms even preferred hiring non-residents to staff their fishing operations, meaning that the local population was largely locked out of the job opportunities the salmon catch provided.
This situation resulted in serious economic deprivation for Bristol Bay residents: “no high schools, sewer or water systems, health care facilities, fire, police, or ambulance services.” The town’s garbage “was dumped over the riverbank in hopes it would flush out with the ice during high spring tides.”
Hammond hit upon an idea to reverse this dynamic. He proposed imposing a 3 percent tax on the fish catch and using the revenues to build out a “conservatively managed investment account” that would pay the residents an annual dividend from its investment returns. Since 97 percent of the fishing was done by non-local firms, this would mean 97 percent of the tax would be paid by non-local firms. Despite its seeming appeal, Hammond’s proposed ordinance failed at the polls, apparently due to anti-tax sentiments.
Hammond did manage to pass the tax a few years later in exchange for an elimination of the local property tax. The massive tax take from the fishing transformed the borough into the “richest municipality in the nation on a per capita basis” according to Fortune magazine, but Hammond nonetheless lamented his failure to establish a universal basic dividend in Bristol Bay.
Alaska Native Claim Settlement Act Failure
Undeterred by his mixed success at Bristol Bay, Hammond again tried to establish a dividend-paying social wealth fund in 1971 on the heels of a $900 million settlement that the federal government had entered into with the indigenous people of the state. Hammond was asked to make recommendations about how the natives could use that money and he suggested they put it in a big fund and use the investment return to pay annual dividends to all Alaskan natives.
As in Bristol Bay, Hammond’s idea was rejected. The native leadership decided instead to invest the money into the creation of over 200 native businesses. This was not the diversified social wealth fund of Hammond’s dreams, but the native-owned enterprises did nonetheless produce dividends for Alaskan natives in most cases.
Success At Last
When Hammond became governor of Alaska in 1974, he found another opportunity to replicate what he did in Bristol Bay. The state’s gas severance tax was about half the national average, but most of the extracted gasoline was being sold abroad. So, he proposed doubling the gas severance tax, creating a $150 state income tax credit to offset any increase in gas prices in the state, and storing the remainder of the revenue in the general fund. This proposal passed.
Hammond’s tax-and-dividend proposal was a success, but not completely. “I found almost no one remembered the tax credit,” Hammond later wrote. “At that point I decided that if another dividend program were established, I wanted to put a check in everyone’s hand, rather than simply a credit for those making sufficient income to pay a state income tax. I thought that by so doing people would better recognize and appreciate the dividend concept and demand the state maximize returns from its resource wealth.”
And this is exactly what Hammond did. In 1976, he got the legislature to put a constitutional amendment on the ballot that would require that “twenty-five per cent 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.” The measure passed by a 2-to-1 margin.44
In 1977, the Alaska Permanent Fund (APF) received its first deposit, $734,000 from oil royalties. In 1980, the legislature created a state-owned enterprise called the Alaska Permanent Fund Corporation (APFC) to manage the apf and created the Permanent Fund Dividend (PFD) program that began paying dividends to the citizens of Alaska two years later. Those dividends continue to flow to this day.45
After 15 years of trying, Jay Hammond’s dream of establishing a social wealth fund that paid out a universal basic dividend finally became a reality.
Vir: Matt Bruenig, People’s Policy Project