Alaska’s economic woes won’t end until we have a long-term fiscal plan

“Confidence in an economy matters,” Dan Robinson, research chief at the state Department of Labor, told the House Ways and Means Committee last month. “There is an economic cost of not solving these problems.”

He was talking with legislators about the state’s job loss, population loss, economic loss and inability to agree on a fiscal plan to pay for public services long term. For most of the past 30 years, Alaska has taken from savings, prayed for high oil prices and rejoiced at any federal aid coming our way.

That’s not a plan, that’s a dream, punctuated by fits of panic and luck.

The lack of a balanced budget with recurring revenues, the lack of political leadership to accept taxes as a reasonable way to pay for public services, the uncertainty over Alaska’s economic future — be it oil, tourism, mining or who knows what else — creates investment uncertainty. Which leads to job loss. Which further weakens the economy and adds to uncertainty.

“When you’re in full retreat … that becomes self-fulfilling,” committee member Rep. Andy Josephson said of the job losses and population decline.

Robinson shared a lot of numbers with the committee, showing that Alaska has lost population, that more people have moved out of the state than moved in every year since 2013, that Alaska ranked last or close to last in job growth categories compared to other states for 2014-2019.

“No state has lost more as a percentage of their population than Alaska has,” Robinson said.

Alaska ranked 48th among the states with our 2.6% overall job loss and the same 48th-place finish with a 2.5% job loss in the private sector 2014-2019. No worry — we were No. 1, or more accurately, No. 50, with a 12.1% job loss in state government, and dead last in state university employment, with an 18.8% decline in jobs.

Of course, some would cheer at the large reduction in state and university jobs, but those lost wages, lost households and lost students hurt the economy the same as private-sector jobs that disappear.

Job opportunities are a big factor in motivating people to move, and Alaska has not excelled at that in a long time. Committee Chair Rep. Ivy Spohnholz, in noting the outmigration from Alaska, said there are not a lot of people who want to move here.

The prognosis? Federal pandemic aid aside, Alaskans need to craft and accept a sustainable, long-term fiscal plan to pay for public services and build investor confidence in our state. We’ve known it for decades, but we avoid it because the choices are unpleasant, including personal taxes and smaller Permanent Fund dividends.

“All of our possible choices have pros and cons, and from an economic perspective, none will be cost-free,” Robinson told the committee. “But until we make those decisions, our economy will struggle.”

Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal service in oil and gas, taxes and policy work. He is currently owner and editor of the weekly Wrangell Sentinel newspaper.

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