AIDEA illegally spent $54 million on capital projects, environmental group charges

The Alaska Industrial Development & Export Authority has developed the bad budget habit of bypassing the public and the legislative authorization process required by the Alaska Constitution and state law for capital projects.

AIDEA has done this routinely under Gov. Mike Dunleavy, who treats the corporation like a private development bank that answers only to him, operating with no oversight from the Legislature. State law says it’s not supposed to be that way.

About $54 million has been improperly spent without legislative approval on the Ambler road project and the oil leases in the Arctic National Wildlife Refuge, according to a thorough complaint filed by Trustees for Alaska.

The complaint asks for an independent investigation of AIDEA’s behavior by the Alaska State Ombudsman’s office.

Capital projects proposed by any state agency are required to be part of the annual budget deliberations in Juneau. This is an important safeguard against corruption, an essential feature that helps make government more transparent and responsive.

One tactic the corporation has employed to avoid public review and transparency is to withdraw money from an account set up within the corporation called the Arctic Infrastructure Development Fund. It is supposed to be a loan fund, but it has been used as a slush fund.

AIDEA has withdrawn tens of millions from its revolving loan fund, transferred it to AIDEA’s Arctic Infrastructure Development Fund, and opted to spend it on capital projects—such as buying leases in the Arctic National Wildlife Refuge and doing pre-construction work on the Ambler Road.

Cutting the Legislature and the public out of the process is a way of avoiding and silencing opponents.

But the 2014 law creating the Arctic Infrastructure Development Fund does not allow AIDEA to spend money this way. That is clear from the comments by legislators, the discussion at the time, supporting documents and the text of the law.

The law called for using assets of the fund to finance projects by issuing loans and loan guarantees. AIDEA is going far beyond that role and using the money to develop projects on its own, without bothering to get legislative approval or hold public hearings.

Money appropriated for the proposed Ambler road project and the oil leases the corporation purchased in the federal lease sale in the Arctic National Wildlife Refuge are prime examples of expenditures that should have been part of the annual capital budget debates.

“AIDEA has not received approval for its expenditures for the Ambler Road or the Arctic Refuge leases through these processes, and AIDEA cannot authorize these expenditures unilaterally. It is contrary to the Alaska Constitution and the Executive Budget Act for AIDEA to usurp the Alaska Legislature’s authority to oversee and approve these expenditures,” Trustees for Alaska said.

Here is the complaint filed by the environmental law group.

AIDEA is run by Dunleavy’s former chief of staff, Randy Ruaro, under a seven-member unelected board that includes two Dunleavy employees and five political allies of Dunleavy.

The complaint is a solid one that deserves public attention, as it exposes one aspect of the erosion of representative government in Alaska.

AIDEA’s authority under its infrastructure development fund “is limited to financing. Financing means the issuance of loans or bonds, subject to the strict parameters allowed by the state Legislature,” the complaint says. The corporation is using the fund for capital projects.

“AIDEA’s actions not only usurped the authority of the Legislature, but also excluded the public from being able to play a meaningful role in overseeing how AIDEA expends state financial resources. These expenditures are occurring at a time when the state is facing budget limits and shortfalls. At the same time, AIDEA also attempted to pay only a $4 million cash dividend to the state treasury last year, along with attempting to transfer the failed Mustang Road to the state, instead of paying what would otherwise have been a $17.8 million dividend to the state,” the complaint says.

“Trustees for Alaska respectfully requests that the Ombudsman immediately conduct an investigation into AIDEA’s pattern of making expenditures without appropriate legislative approval and issue formal recommendations to resolve the issue, including recommendations to the agency to ensure its conduct complies with the law, as well as any recommended statutory changes to the Legislature to prevent AIDEA from acting contrary to the Alaska Constitution and beyond the scope of its statutory authority in the future.”

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