Alaska Pays Every Resident an Annual Oil Dividend

The Windfall That Alaska Chose Not to Spend

In the late 1960s, massive oil reserves were discovered at Prudhoe Bay on Alaska's North Slope, setting off a resource boom that transformed one of the poorest and least populated American states into an energy powerhouse. In 1969, the state held a competitive lease sale for oil and gas drilling rights, taking in roughly 900 million dollars in a single day—an astronomical sum for a young state government whose annual operating budget was only a fraction of that figure. Within a few short years, however, state lawmakers had spent nearly the entire windfall on public works, government payrolls, and community infrastructure projects, leaving little to show for the underlying depletion of a finite natural resource.

Recognizing that oil extraction was a non-renewable bonanza subject to dramatic boom-and-bust cycles, political leaders and civic advocates pushed for a long-term savings mechanism. Governor Jay Hammond, a conservation-minded Republican who had previously served as a bush pilot and state legislator, argued that non-renewable wealth beneath public land belonged to all Alaskans, both present and future. In Hammond's view, simply allowing the legislature to absorb resource royalties into the general treasury invited bloated spending during booms and catastrophic deficits during busts.

In 1976, Alaskans voted overwhelmingly to approve an amendment to the state constitution that created the Alaska Permanent Fund. Under Article IX, Section 15 of the Alaska Constitution, at least 25 percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments, and state bonuses received by Alaska must be deposited directly into this dedicated reserve. By placing this mandate into the state constitution rather than standard statutory law, voters ensured that sitting legislators could not easily divert the incoming oil royalties for short-term political spending.