Alaska Abandons Bid for Tech Future with ASTF Demise

Whether it is oil, gas, logging or fishing, only one other state in the nation, Alaska, is as dependent on natural resource extraction as Wyoming. Using tech-based economic development to diminish the impact of the boom and bust cycles experienced by all "colonial" economies to diversify the state’s economy has been one of the goals of Alaska’s gubernatorial leaders since 1988, with the creation and continuation of the Alaska Science and Technology Foundation (ASTF).

The decision 15 years ago to provide ASTF with an initial $6 million appropriation and a $100 million endowment, which has generated more than $120 million in income, was significant and unique. It also was gutsy for a state that depends heavily each year on Congressional pork and doles out $1,500 dividend checks to each resident from the interest earned on the state’s $24 billion permanent fund from oil sales.

That strategy ends abruptly today, per Governor Frank Murkowski’s request, as the ASTF endowment is shifted to the help balance the state’s general fund. In a March 18 letter to its grantees, ASTF officials explained that the governor’s legislation ordered "all grants and contracts be terminated promptly and that payments be settled and made prior to May 15, in order to facilitate the shutdown of ASTF program operations by May 15, 2003." Many multi-year research and commercialization projects were impacted by the move.

Interest from the ASTF endowment over the years has supported $35 million in matching grants for technology and knowledge projects, $5 million for wiring the K-12 schools and science museums for Internet connectivity, and $2 million for K-12 science and math teacher grants. ASTF has also provided $8 million since 1988 in matching funds to support the operations of several independent partner organizations, such as the Alaska Growth Capital Corporation, the Alaska High Tech Council, Alaska Investnet, the statewide Small Business Development Center program, and the Alaska Manufacturer’s Association.

In addition, $46 million of endowment interest has been used for non-ASTF projects, most of which support building a stronger research and technology base for the state’s economy. For example, $35 million was appropriated by the legislature to fund the University of Alaska, operations of the Alaska Aerospace Development Corporation (AADC), and the International Trade and Development office of the Department of Community and Economic Development. Eleven million dollars was used as state match for federal funding of AADC’s $39 million Kodiak Rocket Launch Center.

In all, the vision shared by Alaska’s Governor and legislature 15 years ago has enabled a state with a population today of approximately 650,000 people to invest more than $126 million into building a tech-based economy. Efforts to salvage the ASTF endowment – or at least provide $250,000 to foster a more orderly period of closing outstanding contracts – were defeated in the legislature, however.

Last fall, then Governor-elect Murkowski was one of the 14 new governors SSTI highlighted as understanding the importance of tech-based economic development for their respective states. He called for developing technology industries as part of Alaska’s resource economy and creating businesses that export that technology in such industries as telemedicine, commercial fishing, and oil and gas. He also advocated increasing laboratory capabilities at the University of Alaska to leverage public and private grants for medical and technological research.

Times have changed in Alaska. In a May 4 opinion piece for the Anchorage Daily News, Gov. Murkowski’s Chief of Staff Jim Clark writes, "Funding entrepreneurship is not an essential function of government."

Clark continues, "The research, applied science and technology development sought by ASTF is available elsewhere…We acknowledge and applaud the good programs ASTF supported, but I would have to agree with the governor that, on balance, it is in the best interest of the state to terminate the program and use the money in the coming fiscal year to maintain core services."

Saved from the state government’s budget ax is $50 million for FY 2004 to market one of Alaska’s traditional fishing industries.

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Copyright State Science & Technology Institute 2003. Information in this issue of SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.