My Turn: Juneau’s economy is stable, but tied to state’s fiscal crisis

  • By Kate Troll
  • Sunday, November 15, 2015 1:02am
  • Opinion

The Juneau Economic Development Council recently released its 2015 Economic Indicators report, showing that if it were not for the loss of government jobs, Juneau’s economy would be growing.

For example, the private sector added over 100 jobs in 2014 and wages were even slightly up, but overall the total wage and salary employment was down by 0.1 percent. The decline in government jobs has been ongoing for several years; the biggest loss of government jobs came from local and tribal government, with a decline of 57 positions while the federal government saw 53 fewer in 2014.

The report also shows a slight increase in gross business sales and 205 new housing units being permitted. When taken all together, these indicators suggest that Juneau’s economy, while still in need of diversification, is stable while government job losses are acting as a drag on economic growth.

“As you will see from our report,” notes JEDC chairwoman Lauren MacVay and executive director Brain Holst, “Juneau’s economy did well overall in 2014 (and appears to be holding steady in 2015). The private sector saw continued expansion, with total earnings in the private sector increased by over 4 percent. … Looking ahead, Juneau’s economy will be impacted by the Legislature’s approach to solving the state’s budget deficit.”

This economic connection to solving the state’s fiscal crisis is an important take away from the 2015 Juneau indicators report. The report further notes, “If cuts to the state’s budget result in job terminations in Juneau, and the federal and local government continues to reduce employment, the community will experience out migration that will have a detrimental effect on its economy.”

In other words, if the Republican leadership in the Alaska Legislature remains entrenched in their “cuts only” focus, Juneau’s economy will continue to be held back despite growth in the private sector. This is not to say that legislators should not try and squeeze more dollars from efficiencies where they can, but there are no cuts big enough to make a sizeable dent in the fiscal gap.

Revenues must be in the mix this year, otherwise our efforts to grow and diversify the economy will continue to be undercut. Yes, there comes a point where a certain amount of government is essential for economic growth. We are at that point in Juneau. If sustained cuts to education, the ferry system or zeroing out the capital budget wasn’t enough to get people to engage with their elected leaders, how about our communities’ overall economic health being at stake?

As I stated in a previous column on the state fiscal situation, we have plenty of options to draw upon: the Constitutional Budget Reserves, Permanent Fund endowment, capping Permanent Fund Dividend checks, adjustments to production tax credits, an income tax — all we lack is the political will to make tough decisions in an election year. Fortunately, this is where an involved citizenry can make a difference.

We need to tell legislators that we will not re-elect them if they don’t at least deal with the easiest, most broadly supported option of setting up a Permanent Fund endowment that allows earnings to be used for funding state government, while protecting the principle of the Fund. This endowment option is even being recommended by the Permanent Fund Board of Trustees as a way to make the Permanent Fund more manageable.

Gov. Bill Walker presented one take on such an endowment plan while former Gov. Frank Murkowski advocates a slightly different plan. However, both endowment plans will gets us $3 billion toward filling the state’s $4 billion budget gap. This step alone stops the bleeding and sends the right signal for our economy.

Addressing the revenue side of the fiscal gap should not wait for a legislative session free of election year politics. After all, we elect our state leaders to make tough decisions in tough times, not just when it’s politically convenient for them. To do otherwise puts our local and state economy at risk.

• Kate Troll serves on the City and Borough of Juneau Assembly. The views expressed are her own.

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