Dunleavy, AGDC, AIDEA and a $50 million gasline con

I know exactly how the 2025 Legislature will cut $50 million from the proposed “fast track” supplemental budget released by Gov. Mike Dunleavy Thursday.

The money to cut without worry is the $50 million that Dunleavy claims the Alaska Industrial Development & Export Authority needs to pay for a promise that AIDEA made on December 4.

The only other item in the fast track supplement is $15 million for disaster relief funds.

The AIDEA bailout is a disaster of a different kind.

The board members of the state corporation unanimously agreed last week that they had the $50 million gas line backstop covered with existing AIDEA resources.

The AIDEA board includes Dana Pruhs, Albert Fogle, Adam Crum, Bill Kendig, Randy Eledge, Bill Vivlamore and Julie Sande. Sande did not particpate in the vote approving the $50 million because she is also on the board of the Alaska Gasline Development Corp.

Here is the AIDEA resolution on the $50 million.

Here is the $50 million Dunleavy is asking for.

Here is the audio of the December 4 meeting.

The AIDEA board and the president of AGDC, Frank Richards, made no mention of needing $50 million from the Legislature.

Richards told AIDEA an unnamed pipeline giant is willing to pay for the $50 million study needed before a final investment decision is made on the gas line, but “they would like to make sure that there is a backstop.”

This means the company would collect $50 million from AIDEA as a refund if the company decided it will not pursue the pipeline project after the $50 million study. The need for a state backstop does not come off as a vote of confidence by the anonymous giant company.

(Richards said AGDC is working with “North America’s largest pipeline company,” but he refuses to identify the company. There are several ways of measuring the largest company, so it could be Enbridge, Kinder Morgan, TC Energy (formerly TransCanada) or a few others.)

Richards said AIDEA would “be able to provide that backstop for this company to start on that FEED effort as soon as we are able to come to agreement and execute an agreement between ourselves and AIDEA.”

“AIDEA in its role will be able to then hopefully provide a standby letter of credit which will stay in the AIDEA accounts, generate interest which remains available to AIDEA, and only draw on this if a final investment decision is not made to move the project forward,” Richards said.

The AIDEA board members did not hesitate in voting to take on the potential $50 million debt—which would have to be paid if the unnamed gas pipeline company AGDC is dealing with completes the front end engineering and then decides to drop the gasline project.

While Richards did not mention the Dunleavy plan to get $50 million from the Legislature when he spoke to AIDEA, the AGDC did include a reference to the plan to get $50 million from the Legislature in the president’s report to be delivered at an AGDC meeting Friday at 9 a.m.

At the AIDEA meeting December 4, Revenue Commissioner Crum said AIDEA would “take a very transparent, knowledgeable, fiduciary” role and “this backstop allows a private partner to start spending money.”

No one from AIDEA mentioned the need for money from the Legislature.

No one from AGDC mentioned the need for money from the Legislature.

AGDC and AIDEA would never have entered into this venture without knowing that a $50 million request to the Legislature was in the offing by Dunleavy.

But by keeping that a secret and engaging in this con job, Dunleavy, AIDEA and AGDC have doomed the proposal as a legislative budget request.

Just last week, the two state-owned corporations claimed that AIDEA alone would provide a backstop.

Because of this, the Legislature has no business bailing out AIDEA and AGDC with $50 million.

“No thanks,” the Alaska Legislature will tell AIDEA. You’ve got this.

PHONY DIVIDENDS PILE UP: Dunleavy’s new budget claims the next Permanent Fund Dividend will be $3,892 per person in Alaska. This is the lastest in the long line of phony Dunleavy dividends that will never be paid.

Imaginary Dunleavy dollars are a standard feature of this annual budget exercise.

Dunleavy’s phony dividends are probably now in the range of $20,000 per person. The Legislature will not approve the phony Dunleavy dividend, as it will not approve taxes to pay the bill.

Dunleavy will not lead the charge for taxes, he will not offer a fiscal plan, he will not cut $1 billion in spending and he will not do anything to make his phony dividends real.

The cost of the proposed phony Dunleavy dividend would be $2.5 billion, which would create a deficit of $1.5 billion. The Dunleavy 10-year plan for phony dividends shows annual deficits of that size or greater for the next decade. The total deficit would be about $12 billion.

Instead of draining the Constitutional Budget Reserve in two years, as proposed by Dunleavy, the Legislature is likely to approve a dividend that would cost about $900 million or $1 billion, which would be about $1,300 per person, give or take a few hundred.

Your contributions help support independent analysis and political commentary by Alaska reporter and author Dermot Cole. Thank you for reading and for your support. Either click here to use PayPal or send checks to: Dermot Cole, Box 10673, Fairbanks, AK 99710-0673.

Write me at dermotmcole@gmail.com.