Alaska residents are paid a unique yearly dividend from state's permanent fund

The Alaska Permanent Fund, established using revenues paid to the state by oil and natural gas producers, provides Alaska residents with an annual cash dividend, which is unique among natural resource permanent funds in the United States. In 2014, the annual dividend was $1,884 per resident, more than double the 2013 dividend and the highest since 2008.

All Alaska residents receive an annual cash dividend from the permanent fund. The fund was established by voters in 1976, as the extent of Alaska's oil and natural gas resources began to emerge, and retains at least 25% of the royalties that oil and natural gas producers pay to produce on leased state lands. Those royalties have provided $800 million or more to the fund annually in recent years. The permanent fund is now worth more than $51 billion, making it the largest trust fund in the United States.

The annual dividend is calculated on a five-year average of investment earnings. Under Alaska law, the fund's principal cannot be spent. When first issued in 1982, the annual dividend provided $1,000 for each Alaskan resident. Since then, the annual dividend has varied from a few hundred dollars to more than $2,000 per person.

In addition, Alaska is the only state without a state income tax or a state sales tax. Production and income taxes on the crude oil and natural gas industry have provided as much as 90% of Alaska's general fund revenues and more than half of its total state revenues from all sources, including federal programs.

Native Americans in Alaska, in addition to their permanent fund dividend, have another unique system for sharing energy royalties from tribal lands. The 1971 Alaska Native Claims Settlement Act (ANCSA), enacted by Congress to resolve conflicting land claims and to encourage energy development, established 12 regional tribal corporations to take ownership of tribal lands, which total 44 million acres, or about 12% of Alaska.

When energy resources are developed on tribal lands, under ANCSA, 30% of royalties go to the corporation holding the land and 70% is shared with the other tribal corporations. Although crude oil and natural gas development is concentrated along the northern and southern coasts, more than $1 billion in royalties shared over the years has provided investment capital for all 12 regional corporations to build diversified businesses, expanding into areas such as energy field services, real estate, and construction. All 12 regional corporations were ranked among Alaska's 50 largest businesses by Alaska Business Monthly in 2014.

Alaska's fossil energy production has been declining as major producing areas on the North Slope age. Alaska's crude oil output was at its highest in 1988 at 738 million barrels; by 2013, it was 188 million barrels. Natural gas marketed production was at its highest in 1994 at 555 billion cubic feet (Bcf); 2013 production was 338 Bcf.

Principal contributor: Allen McFarland