Edward King, Chief Economist for the Department of Revenue, and Donna Arduin, Director of the Office of Management and Budget, speak to members of the media at the Capitol on Wednesday, March 6, 2019. (Michael Penn | Juneau Empire)

Edward King, Chief Economist for the Department of Revenue, and Donna Arduin, Director of the Office of Management and Budget, speak to members of the media at the Capitol on Wednesday, March 6, 2019. (Michael Penn | Juneau Empire)

Alaska’s top economist: Job losses won’t be as bad as predicted

Full PFD would soften shock to Alaska’s economy, Ed King says

No matter which budget solution the Legislature and Gov. Mike Dunleavy approve, there will be negative consequences for Alaskans. That was one of the messages delivered by the state’s chief economist, Ed King, Wednesday at the Capitol.

King was not able to get through his entire presentation on the economic effects of Dunleavy’s budget during the Senate Finance Committee meeting. King made his way through seven of 23 slides before a barrage of questions from the committee members prevented him from moving further.

Later during a press conference, King said a solution must be implemented because the state’s deficit will persist. But each solution has its drawbacks.

[Volatile oil market prompts conservative forecasts]

If government spending is reduced, then jobs will be lost and services will be lowered.

If taxes are raised, there will be lost economic activity and a lower standard of living.

If the Permanent Fund Dividend is cut, then there will be lost economic activity and a lower standard of living.

If assets are depleted, then there will be lower future earnings and bigger problems in the future.

The Dunleavy administration is proposing the first option, and job losses are inevitable, King said.

• Up to 1,000 state jobs could be lost, depending on how the Dunleavy administration’s privatization efforts fare.

• Up to 3,000 jobs could be lost in public schools, depending how the state’s 53 school districts approach the problem.

• Up to 1,500 jobs could be lost at the University of Alaska, and that largely depends on how the board of regents decides to implement cuts.

But how many more jobs could be lost as a result of the budget cuts? The Institute of Social and Economic Research, or ISER, has estimated that 14,272 more jobs would be lost in Alaska. This estimate is based on a study saying for every $100 million taken out of the economy, 892 jobs are lost (with $1.6 billion in cuts, 892 is multiplied by 16 to reach 14,272).

King argued this number is likely much higher than what would actually occur. Part of this is because full Permanent Fund Dividend of $3,000 should stimulate the economy and increase the demand for jobs. If Senate Bills 23 and 24 are passed, providing Alaskans with the payback dividend during the next three years, that stimulus could be larger.

King also said fiscal stability in the government is certain to attract more investment in Alaska and subsequent jobs. However, the length of time before new investment is attracted is unknown.

Department of Revenue Commissioner Bruce Tangeman, who was also at the press conference, was skeptical of ISER’s estimate. He pointed out that employment in Alaska did not see a drastic rise in jobs as the state’s operating budget grew by $5 billion between 2004 and 2014. Nor did Alaska see a dramatic decrease in jobs — it should have lost about 30,000 jobs by ISER’s estimates — since 2014. The state has cut about $3 billion from its operating budget since 2014.

• Contact reporter Kevin Baird at 523-2258 or kbaird@juneauempire.com. Follow him on Twitter at @alaska_kev.

More in News

(Juneau Empire file photo)
Aurora forecast for the week of Feb. 19

These forecasts are courtesy of the University of Alaska Fairbanks’ Geophysical Institute… Continue reading

U.S. Sen. Dan Sullivan, R-Alaska, addresses a joint session of the Alaska Legislature on Wednesday. (Mark Sabbatini / Juneau Empire)
Sullivan touts new ocean cleanup headquarters in Juneau, attacks Biden in annual speech to legislators

Senator calls Trump “the best president ever” for Alaska, has harsh words for Iran and migrants

The Norwegian Bliss arrives in Juneau on April 17, 2023, the first cruise ship of the 2023 season. (Clarise Larson / Juneau Empire file photo)
Free public downtown Wi-Fi, park upgrades, more buses among proposals for marine passenger fees

Public comments being accepted until March 25 for more than $19 million in recommended projects.

Andy Mills (left), legislative liaison for the state Department of Transportation and Public Facilities, and Commissioner Ryan Anderson testify before the Senate Transportation Committee on Tuesday about an executive order that would give the governor full control of the Alaska Marine Highway System’s operations board. (Mark Sabbatini / Juneau Empire)
Governor says he wants control of ferry board so it’s not ‘at odds’ with him; senators express skepticism

Resolution to reject Dunleavy’s executive order among many being considered by legislators.

(Michael Penn / Juneau Empire)
Police calls for Monday, Feb. 19, 2024

This report contains public information from law enforcement and public safety agencies.

Paul Peterson, author of the Harvard study on national charter school performance. (KTOO 360TV screenshot)
Alaska lawmakers grapple with test-score performance gap between charters and other public schools

Charter study does not show how their testing success can be replicated in regular public schools.

An underwater image captured in 2016 shows sockeye salmon swimming up the Brooks River in Alaska’s Katmai National Park to spawn. The U.S. Department of Agriculture is buying about 50 million pounds of Alaska fish — pollock, pink salmon and sockeye salmon — to use in its food and nutrition-assistance programs. (Photo provided by the National Park Service)
Agriculture Department commits to big purchase of Alaska salmon and pollock for food programs

The U.S. Department of Agriculture will purchase about 50 million pounds of… Continue reading

Juneau-Douglas High School: Yadaa.at Kalé students hold up signs during a rally along Egan Drive on Tuesday afternoon protesting a proposal to consolidate all local students in grades 10-12 at Thunder Mountain High School to help deal with the Juneau School District’s financial crisis. (Mark Sabbatini / Juneau Empire)
JDHS students, teachers rally to keep grades 9-12 at downtown school if consolidation occurs

District’s proposed move to TMHS would result in loss of vocational facilities, ninth-grade students.

Deven Mitchell, executive director of the Alaska Permanent Fund Corp., gives a tour of the corporation’s investment floor to Sen. Jesse Kiehl, D-Juneau, and other attendees of an open house on Friday. (James Brooks/Alaska Beacon)
Alaska Permanent Fund Corp. leaders approve proposal to borrow up to $4 billion for investments

Plan must be OK’d by legislators and Gov. Mike Dunleavy because it requires changes to state law.

Most Read