What Happens to the Permanent Fund Dividend and the Rest of Alaska’s Unique Fiscal System as Oil Production Continues to Fall?

Abstract

The Permanent Fund Dividend (PFD) is the most unusual element of Alaska’s unique fiscal system. That system will confront special challenges as a government and economy organized around oil production face both fluctuations in the price of oil and a continuing fall in oil production in Alaska. Despite the popularity of dividends and the aversion to broad-based taxes in Alaska, the state’s fiscal structure will be difficult to maintain, particularly as Alaska’s oil production continues its decline from a peak reached more than 20 years ago.

Discussions with dozens of Alaskans, former Alaskans, and interested observers over the past three decades have sharpened my thinking on the subjects addressed in this chapter. I particularly want to thank Terry Gardiner, Gregg Erickson, Roger Marks, Scott Goldsmith, Eric Wohlforth, John Havelock, George Freeman, Kevin Groh, Theresa Philbrick, Larry Persily, and Allan Shayer, who read and commented on earlier versions of this chapter.