(SitNews) -  “Alaska Megaproject Update,” a new report from independent economist Ginny Fay, analyzes Alaska’s giveaway of public resources, its funding of unsustainable development, and its billions of dollars lost, had public funds been invested more wisely. The analysis is an update to Fay’s 2003 publication, “A History of Alaska’s Mega Projects and Selected Boondoggles,” and highlights a clear need to take a hard look at Governor Mike Dunleavy’s pet megaprojects, including the proposed West-Susitna Access Road.

“Essentially, Alaska is subsidizing a huge giveaway of its public resources,” Fay wrote in the report. “If a project is not financially feasible, subsidizing it with public money to try to make a bad project feasible is poor and unsustainable public policy.”

“When you find yourself in a hole, the first rule is to stop digging, not to buy more shovels,” said SalmonState Executive Director Tim Bristol. “Our current proposed megaproject is the West Susitna Access Road, and the Matanuska-Susitna Borough’s own recently released data shows the vast majority of local Alaskans oppose it — meaning it’s the perfect place to stop wasting our money and to start spending it wisely.”

Lodge owner Steve Perrins is one of those Alaskans opposed to the project.

Perrins said, “The proposed West-Su Access Road threatens the Mat-Su region’s existing economy — while providing no benefit to the state,” said Perrins, who owns Rainy Pass Lodge, on Puntilla Lake. “As an Alaskan, it’s incredibly upsetting that AIDEA is throwing away state money on a project that will damage our economy, kill many Mat-Su tourism-generating lodge businesses, and destroy my business - the oldest hunting lodge in Alaska. I am calling on our elected officials to stop wasting state money on this divisive project.”

AIDEA — the Alaska Industrial Development and Export Authority — currently has $8.5 million of state money to spend on the West Susitna Access Road, estimated to cost $350 million. AIDEA did not give a project presentation to the Alaska State Legislature this year, instead submitting last year’s PowerPoint presentation. For more information on the West Susitna Access Road project visit www.westsuwild.org.

Kirsten Dixon, owner of Winterlake Lodge, chef, and year-round resident of the West Susitna Valley, said “My husband and I made life changes to live where we live, as did most people in West Susitna. Our lodge is one of the oldest in Alaska. It’s deeply disturbing that distant people far away can damage our ability to provide our guests the wild, natural geography we promise them, threaten one of Southcentral Alaska's biggest salmon runs, and change our entire life trajectory. It's time for Alaskans to take a hard look at just why our public money is funding a project that will damage West Susitna's economy and our greatest resource — our land, clean water, clean soil, and clean air.”

“AIDEA is the state’s biggest player when it comes to promoting ill-conceived projects,” said Emily Anderson, Alaska Program Director of the Wild Salmon Center. “AIDEA’s ‘Roads to Resources’ investments have ended up being ‘Roads to Nowhere.’ We need a future we can all live with —one built on a sustainable economy, not on speculative projects that jeopardize our fish and wildlife resources and existing businesses.” 

Also addressed in the report are mines in Southeast Alaska, such as the Niblack advanced mineral exploration project for the development of an underground copper-gold- zinc-silver mine on Prince of Wales Island and the Bokan Mountain mine also on Prince of Wales. The Gravina Island Industrial Complex the leading contender for off-site processing and the permanent storage of associated tailings and the associated heavy rare earth separation facility located north of Ketchikan are addressed. The report noted the Ucore & Niblack Contingent Liability total appropriations/expenditures to date at $270 million.

In the Southeast Alaska region, all mining, which includes the Greens Creek and Kensington mines, had 1,159 total workers, of whom 51 percent were nonresidents (Alaska Department of Labor and Workforce Development, 2021). Noting that these wages leave the state.

The megaprojects report mentions Vigor Alaska previously known as the Ketchikan Ship Yard, with total appropriations/expenditures to date in public funds at $170 million.

The Alaska Department of Transportation and Public Facilities (ADOT&PF) spent approximately $30 million to construct the Ketchikan shipyard during the 1980s to provide maintenance for Alaska Marine Highway System ferries that historically underwent annual drydock maintenance in the Puget Sound area. Under an agreement with the state, the City of Ketchikan subleased operation and management of the shipyard to private contractors. Each operator experienced operational and financial difficulties. In 1991, the State canceled the lease and closed the shipyard for two years. In November 1993, ADOT&PF awarded an operating contract to reopen the shipyard and manage AMHS overhaul projects. In 1997, AIDEA purchased the shipyard for $80 million and entered into an operating agreement with Alaska Ship and Drydock (ASD). Vigor Industrial purchased the shipyard operator, ASD, in March 2012. In 2013 ASD’s name changed to Vigor Alaska (AIDEA, 2020). According to the report, AIDEA has also matched Ketchikan Borough contributions to the repair and replacement fund (AIDEA, 2020).

A few key takeaways from the report are:

• The state of Alaska has wasted hundreds of millions of dollars on failed megaprojects. Meanwhile, state-funded megaprojects that succeeded would likely have succeeded anyway, without a handout. That means megaproject expenditures have led to very low net job creation.
• Had state funds devoted to megaprojects from 1970-2021 been invested wisely, Alaska would have $30.2 billion more in the bank.
• The totals in this report are not exhaustive, but are a sampling of the state’s key megaprojects — which means Alaska has likely lost even more money on bad investments than shown here.
• Alaska’s “fiscal and taxation policy toward mining is archaic and allows the extraction of finite public resources by foreign multinational corporations with insufficient benefits to Alaskans to justify the export of Alaska mineral wealth in the form of raw materials and corporate profits.” In 2017, for example, the State of Alaska collected only 2.3% of the value of mineral production in taxes.
• 35.9% of wages in Alaska’s mining sector, now the focus of AIDEA’s “Roads to Resources” push, go to nonresidents and thus largely leave Alaska.

The full 30-page report is available online for download. An even more in-depth report from an independent Alaska firm, analyzing AIDEA’s financial decisions, losses, and lost opportunity costs, will be released in the coming weeks.

Edited By: Mary Kauffman, SitNews



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