ISER predicts another Alaska recession if governor's vetoes advance
University of Alaska Anchorage economist Mouhcine Guettabi said at the Anchorage Chamber of Commerce's "Make it Monday" forum that he was a bearer of bad news.
He lived up to that self-proclaimed name during the meeting telling the crowd that Alaska could lose more than 4,000 jobs if Gov. Dunleavy's more than $400 million in budget vetoes stand.
"When you take money out of the economy you're going to put pressure on it, and the economy is in a fairly fragile state. And so, in this case, we're potentially pushing it back into recession because there is just not that much growth coming in from other sectors," Guettabi said.
The ISER economist discussed the group's latest report on the impact of Governor Dunleavy's budget vetoes. He says Alaska has had eight straight months of employment gains.
"So that technically puts us out of the recession as it's typically defined as two straight quarters of economic growth or employment gains," Guettabi said.
ISER says the largest line item veto of more than $130 million came from the University of Alaska and says that UA would account for more than 40% of the total job losses in its analysis. With that amount vetoed, ISER says the system would see 1,300 employees directly lose their jobs. Guettabi says Alaska has averaged 1,325 job gains each month for the last eight months.
"So you have the 1,300 gains in employment from construction activity in Fairbanks, from a little bit of retail recovery from oil and gas. So those are gains, and then, those are basically being canceled out by just UA cuts," Guettabi told the forum.
Guettabi also said the UA System vetoes will impact degrees and certificates for years to come. ISER's report says UA will lose a considerable amount of students.
"That obviously bleeds into labor force preparedness into your ability to hire and retain workers," he said.
Guettabi also doesn't think Alaska's recovery is strong enough to make up those more than 4,200 potentially lost jobs.
"For the economy to not dip back into a recession, there needs to be almost 4,000 jobs gained from other sectors of the economy," he said. "The last time the Alaska economy grew at anywhere close to 4,000 jobs in a month over month basis was May of 2014."
Gov. Dunleavy spokesperson Matt Shuckerow said in a phone interview that other people have said spending savings and not addressing spending is why state GDP doesn't grow.
Shuckerow criticized some of ISER's previous employment losses as larger than they actually turned out to be and said some blame the length of the recession and slow growth on the inability to solve budget issues. He also says the question to Alaskans is, how do we pay for services if the state lacks revenue?
There was some talk at the forum, and previously, of whether the Governor's staff are paying attention to the information provided by ISER. Department of Revenue Commissioner Bruce Tangeman attended the ISER discussion on Monday but left before KTVA had the chance to speak with him.
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