Anchorage Daily News

PALMER — Could a recession in the Lower 48 hurt or help the Matanuska-Susitna Borough? It may be too soon to tell.

Local and state officials at a population-predicting roundtable event last week said they aren’t doing anything differently right now. Schools expect continued growth, the borough is going ahead with plans for a new prison, though officials put plans to sell bonds for it on hold pending lower interest rates.

But some economy watchers advised cautious planning for the future. They said the effect on the Valley may depend on how deep the recession becomes, and just how far the price of oil falls.

“I’m always an optimist, but I think a Lower 48 and actually a global recession has started and we’re not immune to that,” said Al Strawn, chief executive officer of Matanuska Valley Federal Credit Union. “We’re probably in the best place to be, but I would be very cautious about the future.”

Strawn was one of about 50 participants in a demographics roundtable last Thursday hosted by the Matanuska-Susitna Borough School District. The district relies on the annual event to project enrollment and map future school plans.

A few attendees saw at least some signs for pessimism.

Reed Dunn, on the credit union’s lending side, said bank activity “hit a wall” in October, and hasn’t improved much since.

“Lock-up is too strong, but everybody is kind of frozen in place waiting to see what to do next,” Dunn said. Banks in Alaska “held up very well” because they stayed out of risky credit markets partly blamed for the financial sector meltdown, said Elena Shawback, a Wells Fargo representative. Still, Shawback continued, with banks getting pickier about who gets loans, people who qualified a year ago may not qualify now. Unemployment, which follows national trends, is creeping up, too.

Jobless rates in the Mat-Su rose a full percentage point to 7.1 percent in September from 6.1 percent a year before, according to statistics provided by Mat-Su borough economic development director Dave Hanson.

Hanson’s statistics also showed a drop in the number of new business licenses issued and homes sold. Meanwhile, dropping crude prices could chill activity on the North Slope, where many Mat-Su residents work. And the state needs oil at $70 or $75 a barrel to balance the budget, said state labor economist Neal Fried.

“I’m unhappy gasoline prices are falling,” he joked.

Silver lining?

Then again, a recession Outside could actually bring people to Alaska and to the Valley: There’s a direct correlation between economic downturns in the Lower 48 and more people moving to the state than leaving, Fried said.

More people stay in Alaska when prospects dim Outside, Fried explained. At the same time, people from other states move here looking for opportunities because our situation looks better.

A recent report publicized by financial research service Moody’s Economy.com described Alaska as the only state in the country with an expanding economy.

“The last two recessions were very mild. I would guess this next recession could be a little deeper or a lot deeper,” Fried told roundtable participants. “We are going to see positive migration from the Lower 48 in 2008, 2009. (Just how much) depends on the severity of the recession.”

Plus, he added, the Mat-Su has received some “heightened interest” in the last few months, given the vice-presidential candidacy of Wasilla’s own Gov. Sarah Palin.

Generally, the Mat-Su tends to get a disproportionate share of people moving to Southcentral Alaska, with newcomers drawn by relatively affordable housing.

Though a third of the Valley’s residents commute to Anchorage and elsewhere for work, the jobs picture is looking up in the Valley, Fried said. He counted 500 new jobs in the first six months of this year, compared to 150 new jobs last year, a drop partly due to declines in construction. New jobs came in retail, health care, government and transportation.

Growth hot-spots remain

Despite slowed growth and questions about the economy, the school district still expects to see moderate growth in coming years.

Unlike other areas, the Big Lake area saw an increase in construction contracts and a stable numbers of homes sold between this year and last, according to regional real estate statistics Hanson provided. Elementary schools in Big Lake and Meadow Lakes saw more students this year, said Deena Paramo, the district’s assistant superintendent of instruction.

Meanwhile, the already crowded Knik-Fairview area could be looking at more potential newcomers. Borough officials predict 600 construction jobs and 350 prison jobs for a proposed medium-security prison at Point MacKenzie, set to open in 2012. It’s unclear how many, if any, workers will move here.

The school district’s chief financial officer — Terrie Irwin, who lives off Knik-Goose Bay Road — said the two-lane road is already plagued by gridlock during the busy commute hours.

“If you’ve ever driven that road, it’s 35 mph, bumper to bumper,” Irwin said, who asked about plans to address the congestion.

Preliminary studies on improving KGB and extending a connecting road — Mack Road to Mack Drive — through to the Parks Highway are underway, said Allen Kemplen, a planner with the state transportation department. But there’s no money for actual construction, and the outlook for federal dollars is grim, given the depletion of a major federal funding source.

At any rate, district spokeswoman Catherine Esary said she thinks people will continue to move to the Mat-Su despite a flagging economy.

“I don’t think that’s going to be changing the overall growth picture for the Mat-Su,” Esary said. “It may change who’s driving a new car or who’s building a brand-new house.”

Find Zaz Hollander at www.adn.com/contact/zhollander or 352-6711.

ADVERTISEMENT