This story was originally published by Dermot Cole, Reporting From Alaska.
Juneau Sen. Jesse Kiehl said something not long ago about how the job of a legislator is often to say no.
The job of saying no to $50 million for the Alaska Industrial Development & Export Authority has gotten a lot easier than anyone expected.
Gov. Mike Dunleavy announced in December that this money was critical and needed to be approved for AIDEA as soon as possible. It would add $50 million to the deficit for this fiscal year, now estimated at $171 million and climbing.
The money was to serve as a moneyback guarantee for a pipeline company that is to undertake a gas pipeline study costing up to $50 million.
But AIDEA is now saying that while it would like to have $50 million from the Legislature, it does not need $50 million from the Legislature.
Put it that way and the Legislature will never agree to give AIDEA $50 million.
I first wrote about this on December 4.
Instead of just turning down AIDEA, however, legislators should find out why Dunleavy claimed in December that AIDEA needed the money and that it was urgent.
Perhaps Dunleavy doesn’t understand the huge cash assets that AIDEA is sitting on. More likely he wanted to try to pump up those assets and allow the corporation to take on more projects without going through the state budget process.
With no public hearing and no real public discussion, the AIDEA board voted in December that it would pay $50 million, if necessary, to a pipeline company for a gasline study. The money would only be paid if the gas company finished the work in 2026 and decides not to build a pipeline.
After AIDEA made that pledge based on its cash stockpile, Dunleavy came in with a request to have the Legislature give AIDEA $50 million more.
In a House Finance Committee hearing in late January, however, AIDEA boss Randy Ruaro said that AIDEA doesn’t need the money, but it would be nice to get $50 million more.
AIDEA has hundreds of millions in easily accessible assets, while the state is running a deficit.
“We are starting to get stretched in my view, on our resources,” Ruaro said of AIDEA.
In fact, AIDEA has plenty of cash and should be sharing more of it to pay for state services through its so-called dividend, which is only $20 million this year. AIDEA is boasting about giving $20 million out of its profits, keeping $46 million.
In explaining why he would like to get $50 million from the Legislature, Ruaro said that AIDEA has had about $400 million in its revolving fund account.
“The board has approved $200 million in projects from Alyeschem, to Hex Furie to the Aviator Hotel and this project. So we are also hoping to keep $100 million in reserve in case we have to bond for a large project. So that brings AIDEA’s available cash, so to speak, to a much lower level,” Ruaro said.
Alyescham is a loan of up to $70 million.
HEX has a loan of up to $50 million.
Ruaro’s comment about the Aviator Hotel appears to be related to this $25 million loan.
It does have other assets that can be turned into cash quickly, however.
“And to be clear we do have funds ($400 million) invested in fixed-income investments. But some of those investments are on a six-year horizon and have been negatively impacted by previous interest rate policies and other things. And so we might incur some realized losses if we were to move those investments to cash. But we’re working on that question as well in terms of what liquidity AIDEA has,” Ruaro said.
What size loss? He didn’t say. He went over it a second time.
“We have roughly $400 million in cash, $200 million of which is committed by the board to projects, different projects. (one of which is the $50 million LNG study.) We have $100 million that we like to keep in reserve for bond authority. And then we have an LPP ( loan participation program) portfolio, which is roughly $400 million. We have hard assets of the Red Dog road and other hard assets. And then we have roughly $400 million invested in fixed income.”
Ruaro said AIDEA would like to have the $50 million. It’s not urgent, he said, and it could be inserted in the FY 26 capital budget because it would be nice to have.
If the $50 million pops up there, the Legislature should strike it out. Even AIDEA says it is not needed.
Dermot Cole has worked as a newspaper reporter, columnist and author in Alaska for more than 40 years. Support his work here.
