In a recent meeting with our lobbyists and legislative delegation, the City and Borough of Juneau Assembly heard more bad economic news.
It’s no secret the upcoming legislative session will continue the state budget-cutting process, along with consideration of new tax measures and structural changes in our Permanent Fund. Up to now, budget cuts have been minimal and Juneau and Southeast residents have been largely shielded from their effects.
What the Assembly heard was this year will be different. Cuts will be deep and will occur at all levels. According to Department of Labor estimates, as many as 350 state jobs in Southeast Alaska could be lost. Furthermore, many of the region’s capital projects have been completed or will be wrapping up this year, putting further pressure on employment numbers.
The state will be looking to minimize all expenditures by pushing as many liabilities down to the municipal level as possible. State match funding for airport and school projects has ended. The Alaska Marine Highway System will face further reductions, exacerbating expensive travel and freight costs in our region and disproportionately impacting the Southeast Alaska economy.
Additionally, pending state cuts will have an even greater impact here than some other regional economies. It is estimated that the multiplier effect could cause the loss of another 1.2 indirect jobs for every state job loss. This means Southeast may experience up to 800 total job losses due to state cutbacks this year.
Unfortunately, this happens at a time when Juneau’s and Southeast’s influence in our Legislature is lower than it has ever been. Demographic shifts have reduced our overall representation and Juneau’s representative, Rep. Cathy Muñoz, R-Juneau, is one of only two legislators in the majority from our region.
While the Assembly was hearing this news, a recent McDowell Group report entitled “Regional Economic Benefits of a Lynn Canal Highway” was being circulated that studies in depth the economics of the Juneau road project. Not surprisingly, the report concludes that the near-term economic impact of the largest construction project in our region’s history would come at a time when Juneau and our region could most benefit.
While this project is slated to cost $552 million, 90 percent will be paid for with federal dollars and Alaska’s matching portion has largely been appropriated and would not jeopardize other projects. More importantly, this shovel-ready project would create 378 jobs and a $39 million annual payroll, plus an additional 152 indirect jobs over its estimated six-year construction life — jobs that would greatly mitigate the expected jobs losses we expect to suffer from state budget cuts.
While this provides ample reason to favorably consider the project, the McDowell Group study points to numerous other long term advantages.
• Resident travel: Ferries now only meet about 7 percent of total travel demand in Lynn Canal. Road access will dramatically lower travel costs and increase capacity. Without a highway, the EIS estimates it will cost a family of four $311 to travel one way between Skagway and Juneau. After construction of a highway, this cost would be lowered to $74 and vehicle capacity would increase over ten-fold.
• Economic opportunities: Vastly improved access between Juneau and northern Lynn Canal (Haines, Skagway and Whitehorse) will create new opportunities for business and travel, especially in healthcare, recreation and tourism. Significantly, 165,000 new visitors annually could be expected in Juneau and approximately 100,000 in both Haines and Skagway.
• Tax revenues: Due to increased visitor spending and access to Juneau services, CBJ could expect $1.2 million in additional sales and property taxes.
• Freight transportation costs: The use of overland trucking to ship fresh fish could lower transportation costs by half over air freight. Competition for freight with barge services will also lower costs there.
• Alaska Marine Highway System: Before any new budget cuts this year, AMHS reductions in 2016 will mean 30 percent fewer port calls and 45 percent less vehicle capacity in our region. Further cuts will threaten all communities dependent on this service. The Lynn Canal Highway project will lower overall costs of the ferry system and provide consistent, low-cost transportation options.
The construction related benefits of the Lynn Canal Highway are important and timely, but more importantly, the longer term benefits of improved transportation in our region remain the fundamental reason for its construction.
Gov. Bill Walker has wisely continued moving the project forward in spite of the fierce opposition of the environmental community. In the next several months, his administration will be reviewing the final EIS and record of decision recommending a preferred alternative. Only his support of Alternative 2B, constructed up the east side of Lynn Canal, would provide all the benefits outlined above and give our region and Alaska a much needed boost in this fragile economic time.
• Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and is active in community and statewide organizations.