Alaska’s state economic development agency may be reined in

While the complexion of the next Legislature may be different, indications seem to suggest a transformation of the Alaska Industrial Development and Export Authority (AIDEA) may be in store.

Shortly after the House Finance Committee rejected a House Transportation Committee recommendation that AIDEA be granted bonding authority for $300 million to do, essentially, whatever it wants within its broad authority, the Senate Finance Committee did the same. Importantly, several key members of the upper chamber suggested more may be in store next year.

Sens. Lyman Hoffman, Donny Olson and Jesse Kiehl, all of whom are likely to be back next year, asked probing questions of AIDEA CEO Randy Ruaro, after a long presentation by two experienced long-time Alaska economists, Gregg Erickson and Milton Barker, who were retained by a Southeast Alaska nongovernmental organization, SalmonState. 

Sen. Bert Stedman, chair of the committee, kept the presentations on track, and didn’t comment directly until the primary presentations were complete, but suggested the committee will be taking a closer look at the semiautonomous agency. 

Criticisms of AIDEA had little impact on legislators until Erickson and Barker released a second round of reports on AIDEA which revealed not only had the agency’s major projects resulted in minimal economic growth, but its loan programs primarily benefited speculative real estate investors. 

Ruaro, who has worked for Stedman, Gov. Mike Dunleavy and others, did an admirable job of trying to deflect the criticism, but did little in the end.

A key opinion piece by Republican former Sen. Rick Halford in the Anchorage Daily News argued the current framework for AIDEA prevents the Legislature from fulfilling its constitutional duty to control the state’s purse strings. He argued the executive branch has an empty purse, unless it is filled by the Legislature. In other words, the executive branch cannot unilaterally do what it wants monetarily without legislative approval. 

Two of AIDEA’s current major projects are in serious trouble. 

The Biden administration recently released an environmental impact statement reversing former President Trump’s approval of AIDEA’s proposed 211-mile road to access the Ambler mining district. NANA, the powerful Native corporation representing Northwest Alaska, reversed its approval of the controversial road. Ruaro said AIDEA will reroute the road to avoid crossing NANA’s property. 

The Biden administration announced it would cancel AIDEA’s exploration tracts in the Arctic National Wildlife Refuge. AIDEA held the only ANWR tracts after two small oil companies released theirs. No major oil companies submitted bids. 

In response to questions by Kiehl, Barker, who sat on the AIDEA board of directors for several years, said he thinks AIDEA could fulfill its statutory duties if the Legislature shifted the agency’s $500 million in cash resources to the state treasury by using its bonding authority.

A second possibility for reining in AIDEA would be for the Legislature to pass a bill requiring the agency to propose its major projects for inclusion in the capital budget.

The governor appoints all members of AIDEA’s board of directors. No confirmation by the Legislature is required.