AEDC predicts Anchorage recession will continue
The first five paragraphs of a newly released economic outlook report for Anchorage paint a painful picture of the city’s economic future.
"Draconian cuts to the State budget, as they stand now, essentially destroy any chance of economic recovery and in fact promise to push the local economy back into recession for two to three more years," read the Anchorage Economic Development’s three-year outlook released Wednesday.
Just a year ago AEDC was announcing a positive outlook for the end of the recession.
"We pretty much lay this at the feet of the current impasse at the state level in state government over how to move forward to deal with the state budget," said AEDC President and CEO Bill Popp.
The report says "State agency budget cuts are expected to cost the Alaska economy 4,700 jobs, including 2,000 Anchorage jobs, over the next few years."
A recent budget bill passed by the Senate includes a $1,600 Permanent Fund dividend and restores $110 million in vetoes that Gov. Mike Dunleavy proposed to the University of Alaska system. But the governor must still act on the bill and is on record as not supporting a $1,600 PFD. He insists the payout should be $3,000 under the current funding formula. After he receives the bill, the governor can still veto portions or all of it, or can sign it without any vetoes.
"In addition to harmful near-term economic impacts, gutting the university system will stunt for many years Alaska’s effort to build a high-quality, resident workforce. Many Alaskan students and instructors may well seek more secure opportunities elsewhere in the country," read the AEDC outlook.
Popp believes cuts were too much too fast and AEDC continues to encourage the Legislature to reverse the cuts.
"To a significant degree and then to reset the conversation to look at a more moderated, overtime set of cuts, balanced with new revenue and use of the Permanent Fund to prevent shocks to the system," said Popp.
On the positive side, Popp says there is some employment growth in construction, attributing some of it to repairs made necessary by the Nov. 30 earthquake. There have been some increases in commercial construction, and there are good signs when it comes to the number of people traveling to Anchorage by air.
"AEDC expects 2019 passenger volume of 5.73 million, exceeding the 2018 record by 1.5 percent. Strong visitor industry activity in the state will support passenger volume growth of about 1.5 percent annually through 2022," the report read.
The corporation anticipates statewide cruise volume will increase by 16.5% this year.
The report also says employment numbers in oil and gas are unlikely to return to pre-recession levels right now, but work on the North Slope is "an encouraging sign of optimism among producers.” The report listed the following projects:
-ConocoPhillips began production at Greater Mooses Tooth 1, which will ramp up to roughly 25,000 barrels per day in coming months. The company’s recent exploration season was the most ambitious in over a decade.
-Hilcorp’s Moose Pad will produce over 20,000 barrels per day when fully operational. Production at the development came online in April 2019.
-The Liberty Project has potential to add more than 60,000 barrels per day to the Trans Alaska Pipeline System (TAPS). The project continues to gain the approximately 60 federal, state, and local permits needed for production to begin.
-Oil Search’s Pikka Unit is expected to produce up to 120,000 barrels per day with first production expected in 2020.
-Cook Inlet continues to see exploration and development activity focused primarily on natural gas production. Hilcorp, Furie, BlueCrest Alaska, and Glacier Oil & Gas are among the companies pursuing opportunities in the region.
The AEDC also released its Real-Time Jobs Intelligence Report that gives insight into the Anchorage job market in the second quarter of 2019. It says there were 16,479 total job postings online in the second quarter of 2019. The 10 most common listings were:
- Retail Salespersons
- Secretaries and Administrative Assistants, Except Legal, Medical and Executive
- Registered Nurses
- Social and Human Service Assistants
- First-Line Supervisors of Retail Sales Workers
- Customer Service Representatives
- Computer User Support Specialists
- Laborers and Freight, Stock, and Material Movers, Hand
- Maintenance and Repair Workers, General
- Combined Food Preparation and Serving Workers, Including Fast Food
The employers with the highest number of job openings, according to the report, are:
- Providence Health & Services
- The University of Alaska
- Hospital Corporation of America (Alaska Regional Hospital)
- Municipality of Anchorage
- Workplace Alaska
- Alaska Native Tribal Health Consortium
- Southcentral Foundation
- Carrs Quality Center
- State of Alaska
- Aramark Food and Support Services Group Inc
Last week Dunleavy said the Legislature is not unified and at odds with itself as to how to pay for government and what services the state wants to retain.
"So it's my hope that we follow the laws, that we pay a full PFD. If they want to change the [statutory PFD formula] then they need to change the law. The Legislature needs to agree with whatever changes the laws are going to be. I'll take a look at that law and decide if it's in the best interest of Alaska,” the governor said.
On Monday the House approved funding for a budget bill that restores money for university scholarships, rural energy assistance and the state’s medical school program. Senate Bill 2002 also funds highway, airport and other construction projects that trigger nearly $1 billion in federal matching dollars.
Copyright 2019 KTVA. All rights reserved.
MORE NEWS FROM KTVA: