As Alaska lawmakers contemplate the need to spend from savings to balance next year’s state budget, a unique investment by the state’s departing revenue commissioner is drawing their attention.
Shortly before leaving office in July to run for governor as a Republican candidate, former commissioner Adam Crum approved a $50 million private-equity investment with the firm DigitalBridge, using money from the state’s principal savings account.
That account, the Constitutional Budget Reserve, has about $2.9 billion and until now has been invested in ways that can be easily convertible to cash in case the state needs to spend it on short notice.
Private-equity investments, which typically involve taking a share of a company that isn’t yet listed on a stock market, frequently take years to mature. This is the first time the CBR has been invested in private equity.
The DigitalBridge investment cannot be canceled, said a spokesperson for the Alaska Department of Revenue.
Though the investment involves less than 2% of the budget reserve’s funds, state legislators expect to spend — at the least — hundreds of millions of dollars from the reserve next year in order to pay for services and the Permanent Fund dividend.
Senate President Gary Stevens and Speaker of the House Bryce Edgmon said in a written statement on Oct. 3 that they “were caught off guard” when they learned about the move.
They said putting “tens of millions of dollars into an illiquid, high-risk investment” undermines the purpose of the budget reserve, which is to provide stability.
“Future high-risk investments of this nature should not occur without the involvement of the Legislature,” they said.
Crum’s successor as revenue commissioner, Janelle Earls, was also concerned about the process used for making the investment, said Aimee Bushnell, a spokesperson for the Department of Revenue.
“After being advised of the acting commissioner’s concerns, the governor apprised legislative leadership of the transaction, forwarded documents to the legislative auditor for review, and directed an outside third-party review be conducted to determine whether there were in fact any violations of policy and make process recommendations as appropriate,” she said.
Crum, speaking by phone on Oct. 9, said he was surprised by the reaction, in part because he had been working on the investment for more than a year.
Crum said he asked the Department of Law and then-Attorney General Treg Taylor whether he could pursue alternative investments.
The answer was yes, and Crum signed a revision to the CBR subaccount investment policy on July 29. He left office on Aug. 8, and the DigitalBridge investment closed three days later.
The money isn’t going to in-state projects, and Crum said he has no personal ties to DigitalBridge, which says on its website that it is “a leading global alternative asset manager dedicated to investing in digital infrastructure.”
Crum said that as revenue commissioner, he had a fiduciary duty to make sure the state’s investments were working as best as they could.
Senate President Stevens, by phone on Oct. 9, said he understands that the investment is a small part of the CBR, but “we’re concerned that we don’t know what’s going to happen in the economy. We don’t know if oil is going to go to zero. It has in the past, and we’re concerned about having the money we need to run government.”
In May, members of the Senate said at a news conference they were worried about a gap between revenue and expenses in 2026 and said that gap could be as large as $600 million.
An unexpected drop in oil prices or production could widen that gap.
Crum said he believes that if the Legislature needs the last $50 million in the CBR, the state will have much bigger issues by that point.
“The $50 million is such a low dollar amount that I do find it amusing that legislators are clutching their pearls about it, because if we somehow burned through $3 billion in savings and we’re down to our last $50 million, we’re dead in the water,” he said.
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