Conservation group reports criticize Alaska development bank’s job-creation record

Alaska’s economic development agency inflates its job creation numbers and participates in wasteful loan practices, assert reports written by two Alaska economists and released by a conservation group on Wednesday.

A report on the Alaska Industrial Development and Export Authority’s loan participation program says that over the last 15 years, the agency has created only 6% of the Alaska jobs it claims. Nearly all the jobs AIDEA says it created during that time would have been created anyway by loans provided by banks, without AIDEA’s involvement, the report asserts.

The three reports were written by longtime Alaska economists Gregg Erickson and Milt Barker. They were commissioned by SalmonState.

Erickson has served as director of research for the Alaska Legislature and senior economist in the governor’s office after joining the administration of Democratic Gov. Bill Sheffield in 1984. Barker has worked as former deputy commissioner for the state Revenue Department and served on the AIDEA board.

“We reached out to them as people with deep historical knowledge and economic expertise and said, ‘Let us know what you find,” said Mary Catharine Martin, a spokesperson with SalmonState, in an email.

“What we found was public waste — and private gain,” Barker said in a prepared statement from SalmonState. “From 2008 to 2023, AIDEA’s $417 million of large loans wasted more than $363 million that served only to enrich borrowers, with no increase in Alaska jobs or economic development.”

The agency shot back on Tuesday even before the reports were made public. AIDEA said it was rejecting the reports as “inaccurate and biased” and said that wealthy left-wing donors fund SalmonState.

Under the loan participation program, the agency works with financial institutions to provide financing to borrowers. The program seeks to lower debt payments for business enterprises and projects in Alaska.

Josie Wilson, spokesperson with AIDEA, said in an email that many of the loans in the loan-participation program would not have happened if not for AIDEA.

“The banks actually come to us,” Wilson said.

“It’s no surprise that SalmonState” would attack AIDEA “because we continue to be successful in creating jobs and economic development in Alaska,” Randy Ruaro, AIDEA’s executive director, said in an additional statement following the report’s release.

“AIDEA is proud of the hundreds of small businesses we have been able to invest in such as Drake Construction and their Kotzebue Sound barge,” Ruaro said.

AIDEA has successfully taken steps to reduce legislative oversight, Erickson said in a written statement provided by SalmonState. “The good news is that it’s fully within the Legislature’s power to take back that control, to stop exempting AIDEA from the most important laws that protect the public, and to ensure the $1.4 billion of state money in AIDEA’s hoard does not continue to bleed out to projects that don’t even create jobs,” Erickson said.

Erickson and Barker in 2022 wrote a report also commissioned by SalmonState that asserted that the agency makes poor investments and needs oversight. That report said the Alaska government would be about $10 billion wealthier if the $300 million it has invested into the agency had instead been invested in the Alaska Permanent Fund.

In response to that unflattering study, the state agency hired Alaska firm Northern Economics after issuing a request for proposals for a study of the agency’s “impressive economic and investment history.”

The request said AIDEA would pay between $100,000 and $250,000 for the report. The agency anticipated that the report would be available by late last year.

That report is not yet complete.

“It’s telling that after a year and a half, the $250,000 report AIDEA commissioned to attempt to rebut “AIDEA: Cost and Financial Performance” is still nowhere to be seen,” said Martin, with SalmonState.

Ruaro said Northern Economics is still working on the independent analysis.

“AIDEA has substantial programs and projects that have benefitted Alaskans so the task is complex to do a thorough and accurate job,” Ruaro said. “What we are seeing so far is very positive.”