Alaska Lawmakers Propose Legislative Oversight of $80B Permanent Fund Board

Alaska lawmakers proposed Tuesday requiring legislative confirmation of Alaska Permanent Fund Corporation board members for the first time in more than 40 years, as the state's $80 billion sovereign wealth fund now provides more than 60 percent of the state budget.

The House Labor and Commerce Committee discussed legislation that would give the Legislature oversight of trustee appointments to the corporation that manages Alaska's oil wealth savings account. The fund has grown dramatically in importance since lawmakers last had confirmation authority from 1980 to 1982.

"For more than eight years, more than 60 percent of our source of revenue in the budget has come from the permanent fund," the bill's sponsor said. "The legislature holds the power of the purse."

The proposal faces significant constitutional hurdles. Legal analysis cited during the hearing referenced a 1976 Alaska Supreme Court case, Bradner v. Hammond, which ruled that the Legislature cannot expand confirmation requirements beyond what the Constitution explicitly allows because appointment power is fundamentally an executive function.

"In order for the statute to be very constitutionally clear, we may need to amend this bill to include a constitutional amendment," the sponsor acknowledged. The Alaska Permanent Fund Corporation board does not qualify as a regulatory or quasi-judicial agency that would typically require legislative confirmation.

The legislation would also require board members to be Alaska residents and extend their terms from four to six years. Currently, trustees do not need to live in Alaska.

"I was very surprised that these board members do not have to be an Alaska resident," the sponsor said. "When you are an Alaska resident here, you have an investment, you have a different mindset about what is important."

One committee member noted the apparent inconsistency in state oversight. "I think probably a lot of Alaskans would be a little confounded if you told them we confirm members for the Board of Barbers and Hairdressers, but we do not have any oversight on the Permanent Fund Corporation board," the lawmaker said.

The sponsor said the fund's growing role in state finances has changed the calculus on legislative oversight. When first elected, the lawmaker would have opposed such oversight but now sees the need for balance between the fund's investment autonomy and legislative authority.

"I like that they have autonomy outside of politics. We want them to invest the fund without getting in the middle of all of our political debate," the sponsor said. "However, when the legislature holds the power of the purse, I think that there needs to be a check and balance."