From 2020 to 2021, Anchorage had a net outmigration of 2,801, the continuation of an eight-year trend of declining population. Some of this outmigration is the result of a housing shortage, causing people to move to the Mat-Su. A lot of this drop in population is people leaving the state at least in part to a weak economy. This impacts Alaskans who stay.
When a place is shrinking, companies leave town and take opportunities with them. Ambitious young people face the choice between staying close to family or moving elsewhere to build a future. Our workforce shrinks, our tax base shrinks and Anchorage becomes less competitive for future economic growth. As motivated Alaskans chase opportunity and amenities in the Lower 48, Alaska becomes a less attractive state for entrepreneurs and businesses to invest and create new jobs.
Alternatively, places that are growing tend to grow faster in the future. Prosperous places attract people looking for jobs and to start businesses. They bring with them additional resources and opportunities which mean more revenues for things like public safety, education and healthcare with lower tax rates. As cities offer more amenities, more people and more businesses are attracted to the area in a virtuous cycle. Anchorage should strive to grow, and in order to do so it needs to attract and maintain a workforce that will bring investment into Alaska.
Construction projects such as transportation infrastructure and schools, and investments in public safety and recreation, make Anchorage a more desirable place to live and will be key to retaining residents. In a city of extreme weather and studded tires, investments in roads and transportation are a vital minimum requirement, not a luxury. Making sure our first responders have access to the best equipment possible is important in a world of wind storms and earthquakes. Our trail systems and access to the outdoors are outstanding assets and attractions for new residents.
These investments are long-lived and often paid for using bonds. Bonds allow the city to borrow money upfront and pay for larger projects over a longer period of time. Since 2016, the average annual total of all bond issues on the ballot has been $50 million. This is while state support for capital investments and revenue sharing is declining. Bond rates are currently low for municipal debt, meaning that the city faces a low cost of making investments in our future economic growth. Similar to refinancing a house, low interest rates provide an opportunity for the city to invest at a lower cost. By borrowing to fund investments, the cost is shared with future residents who benefit from the completed projects through higher quality of life and higher property values. Like a homeowner, it is still vital to examine investments in our city to make sure they make sense. This is why bond issues are voted on by Anchorage residents. Since 2016, bond issues have received an average 56% yes vote and 86% of bond issues pass.
Benefits from these investments also impact property values. Being located near a nice park or near a quality school boosts the value of a home. Additionally, rising property values encourage further investment by the private sector. A homeowner or landlord is more likely to invest in updating or maintaining a property whose value is rising over time. The opposite cycle is also true -- homeowners and landlords are more likely to stop investing in a property whose value is falling because they are unlikely to get back the money they put into the property. This would make it harder to keep people, make it harder to retain and attract businesses, and reduce economic opportunity for people in Anchorage.
Anchorage should try to retain people and attract businesses to increase economic opportunity for its residents.
Kevin Berry is an associate professor of economics at the University of Alaska Anchorage.
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