It is unclear how much Alaska spends in total on its economic development programs – which focus on the state’s dominant petroleum, mining and fishing industries – but the amount seems to be substantial for the fourth least populated state. It is projected that the state will pay $625 million in tax credits through its Oil and Gas Production Tax Credit program in 2015, exceeding its expected production tax revenues for the year by $100 million. A shortfall of $400 million is expected in 2016. This discrepancy is prompting the state’s economic development finance corporation, the Alaska Industrial Development and Export Authority (AIDEA), to review the tax credits and consider alternative financing strategies, such as direct equity investments. The Development Finance Program also has significant cost with a loan balance of $380 million in 2014, down from a high of $469 million in 2011.
The state’s Film Industry Tax Credit program has also been called into question with rising budget shortfalls. The program was initially funded at $100 million over 5 years (ending in 2013) and was reauthorized at $200 million to expire in 2018. Sarah Palin’s Alaska reality TV show was a high profile recipient of $1.2 million through the program, which Palin herself signed into law in 2008. As of early 2015 the program is effectively on hold as Gov. Bill Walker’s recent budget proposal does not provide continued funding ,and a bill introduced by Sen. Bill Stoltze would repeal the program all together, saving the state up to $180 million in future tax credits.
In addition to these high dollar tax credit programs, Alaska has historically spent heavily on a handful of dubious pet development projects. The state invested more than $200 million in the Healy Clean Coal Project in 1989, which was ultimately shut down (see below). In 1997, the state’s Industrial Development and Export Authority agreed to help finance the $125 million Alaska Seafood International processing plant, which also failed (see below).
Two of the four programs we looked at provide some online recipient disclosure: the Film Industry Tax Credit and the Development Finance Program. Taxpayers are still in perpetual darkness on recipients of Commercial Fishing Revolving Loans and the incredibly expensive Clear and Equitable Share/ Oil and Gas Production Tax Credits.
- Show Us the Subsidized Jobs rank among the states: 26th
Big Giveaway Index
Major Subsidy Deals
Alaska Seafood International (1997)
In 1997 the Alaska Industrial Development and Export Authority (AIDEA) agreed to help developer Howard Benedict and Taiwan’s Central Investment Holding Company finance a $125 million seafood processing plant in Anchorage. The Alaska Seafood International project, years in the making, was designed to produce fresh and frozen table-ready seafood meals for domestic and foreign markets. In 1998 the AIDEA voted to purchase the plant for $48 million once it was completed and lease it to the private operator. The plant began production in 2000, but only a few months later Central Investment Holding said it wanted out, forcing the plant to suspend operations. The AIDEA injected another $6.5 million into the project, taking a 22.5 percent equity interest. In 2001 New York investment firm Sunrise Capital Partners bought a 25 percent share, but the state had to continue propping up the faltering project. In 2002 AIDEA wrote down about half of its investment in Alaska Seafood. The following year the state cut off its support for the project, which soon had to be shut down. (Key sources)
Healy Clean Coal Project (1989)
The Healy Clean Coal Project was the product of a desire to use the output of the state’s single coal mine to provide an alternative source of power for Alaska’s interior. The plan originated in the 1980s, amid the first wave of enthusiasm for the idea of “clean coal.” After agreeing in 1989 to spearhead the project, the Alaska Industrial Development and Export Authority (AIDEA) combined a $25 million state appropriation, a $117 million grant from the U.S. Energy Department, the proceeds from an $85 million bond issue and other public funds to finance the construction of a plant that was supposed to be operated by the Golden Valley Electric Association.
The experimental plant was built near Denali National Park at a cost of $267 million and operated sporadically for two years as its equipment was tested. It was shut down at the end of 1999 after a poor showing in a final test of its pollution-control capability. Golden Valley turned its back on the project, and in 2002 the AIDEA wrote down half of its investment. In 2006 the state legislature allocated $12.5 million to restart the plant, but the measure was vetoed by Gov. Frank Murkowski. Three years later, AIDEA announced that it would lend Golden Valley the money to buy the plant for the bargain price of $50 million, but it has not yet resumed operation. (Key sources)
Walmart in Alaska
- Good Jobs First found no instances of Wal-Mart subsidies in Alaska, but given the absence of comprehensive centralized data, it is still possible that deals have quietly occurred.
- We found no instances of property tax assessment challenges by Wal-Mart in Alaska, but given the absence of centralized data, it is still possible that appeals have occurred.
- Many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope. These workers often turn to taxpayer-funded health programs such as Medicaid. Alaska is among those states that have not disclosed data on the employers with the most workers or their dependents enrolled in such programs.
For more information, see Wal-Mart Subsidy Watch.