This story is republished from dermotcole.com with permission.
In September 2022, Alaska economists Gregg Erickson and Milt Barker, two of the leading experts on the history of Alaska’s state government, did a financial analysis of the Alaska Industrial Development & Export Authority.
As I wrote at the time, their review paints a devastating portrait of AIDEA’s financial performance, where politics has almost always trumped economics.
In terms of getting trustworthy researchers with the institutional knowledge of state finances to carry out this work, it would be impossible to find a better pair of experts than Barker and Erickson. They know state government and how it works.
“We documented that since AIDEA’s inception, the majority of its 26 projects have either produced no new jobs, floundered or gone bankrupt,” Erickson wrote in February 2023.
“AIDEA makes economic development expensive in part because of the poor financial performance of AIDEA’s economic development investments,” they wrote in AIDEA Cost & Financial Performance— A Long, Hard Look.
AIDEA did not like the report by Erickson and Barker and claimed there were errors, without providing particulars. A state-funded $250,000 study is reportedly still in the works, a long-delayed response.
That hasn’t stopped Erickson and Barker from expanding their research to look at AIDEA’s often-repeated claims of creating new jobs. They’ve done the work under contract with Salmon State. Here is the press release from that group.
In one of three new reports released Wednesday, they said the flagship large loan participation program of AIDEA has created at most 15 new jobs a year for Alaskans.
“To do this, AIDEA spent $417,446,271 to purchase participations in commercial loans being made by banks and credit unions,” they said.
“94 percent of the jobs AIDEA claims it created with its 2008‒2023 large loan participations are inflated numbers of jobs that would have been created by bank lending without AIDEA,” they wrote in AIDEA Loan Participation Program—A Closer Look.
A second report details the history of the $1.4 billion AIDEA endowment provided by the state, “The AIDEA Endowment: A Short History of a Disputed Resource.”
The third report describes how the agency is no longer subject to the constraints that apply to other parts of state government. In many respects, it is nearly an autonomous organization, operating without legislative oversight, transparency and open competition for contracts.
“AIDEA has become a major investment bank, exempt from the federal laws that govern such banks, with little state regulation, and sitting on a treasure trove of largely locked-up state assets,” they wrote in “AIDEA’s March to Autonomy.”
More on this at a later date.
Dermot Cole has worked as a newspaper reporter, columnist and author in Alaska for more than 40 years. Support his work here.