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Alaska’s Unique Economic Structure and Fiscal Challenges

Alaska’s Unique Economic Structure and Fiscal Challenges. Scott Goldsmith Professor of Economics Institute of Social and Economic Research University of Alaska Anchorage. Alaska Economics. The Structure of the Economy Recent Economic History Population Trends A Look to the Future

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Alaska’s Unique Economic Structure and Fiscal Challenges

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  1. Alaska’s Unique Economic Structureand Fiscal Challenges Scott Goldsmith Professor of Economics Institute of Social and Economic Research University of Alaska Anchorage

  2. Alaska Economics • The Structure of the Economy • Recent Economic History • Population Trends • A Look to the Future • State & Local Finances • The Economic Regions of Alaska

  3. Alaska Economics • The Structure of the Economy • Oil and Government Dominate • Recent Economic History • Population Trends • A Look to the Future • State Finances • The Economic Regions of Alaska

  4. Alaska Economics:The 5 Sectors

  5. Alaska Economics:The Traditional Resource Sector

  6. Alaska Economics:The New Resource Sector

  7. Alaska Economics: The Federal Sector

  8. Alaska Economics: The Oil and Gas Sector

  9. Alaska Economics:The Personal Assets Sector

  10. Alaska Economics • The Structure of the Economy • Recent Economic History • Decelerating Growth • Population Trends • A Look to the Future • State Finances • The Economic Regions of Alaska

  11. Employment Growth Rate is Slowing

  12. Alaska Lost 4,000 Basic Jobs in the 1990’s

  13. Alaska Gained 16,000 Basic Jobs in the 1980’s

  14. Per Capita Personal Income Growth Rate is Down

  15. REAL PERSONAL INCOME:Growth Since 1990

  16. REAL PERSONAL INCOME: Growth 1980 to 1990

  17. AVERAGE PAYCHECK: Falling

  18. Natural Resource Job Growth

  19. A Large Share of Growth is Due to Oil

  20. Population Growth Cycles Follow Job Growth

  21. Growth Drives Down the Cost of Living

  22. Economic Driver #1.FEDERAL AID PER CAPITA: HIGHEST STATES IN 99

  23. TOTAL $1,932 Highways $362 Medical Assistance $282 Indian Health Service $259 Health/Human Service $142 Bureau of Indian Affairs $109 Impact Aid $101 Environmental Protection $ 84 Federal Aviation Admin $ 79 K-12 Education $ 76 Food/Nutrition Programs $ 61 Jobs and Training Admin $ 56 NOAA $ 37 Justice Programs $ 32 Rural Water/Sewer $ 32 NSF $ 18 Alcohol/Drug Abuse $ 15 Disease Control $ 13 Economic Development $ 12 Energy $ 11 Housing $ 11 All Other $140 Federal Grants: 1999 (Million $)

  24. Federal Payments to Persons: 1999 (Million $) • TOTAL $1,232 • RETIREMENT AND DISABILITY • Social Security $453 • Federal Retirement $123 • Veterans Benefits $ 71 • Other $140 • OTHER • Medicare $161 • Unemployment Compensation $120 • Food Stamps $ 49 • Public and Indian Housing $ 33 • Other $ 83

  25. Economic Driver #2.The Importance of the Permanent Fund Dividend

  26. Real Personal Income Growth:1990 to 1999 • Total PI Increase (million) $1,784 • Fed & State Govt $$$ $ 1,251 • PFD $ 425 • Fed Trans $ 420 • ½ Fed Grants $ 405 • Govt $$$ Multiplier $ 375 • All Other $ 158

  27. Alaska Economics • The Structure of the Economy • Recent Economic History • Population Trends • Older, More Diverse & Urban • A Look to the Future • State Finances • The Economic Regions of Alaska

  28. Population Growth Rate is Down to US Average

  29. POPULATION UNDER 40: No Growth

  30. POPULATION CHANGE: 1990 to 1999

  31. Alaska Economics • The Structure of the Economy • Recent Economic History • Population Trends • A Look to the Future • Uncertain Growth Prospects • State Finances • The Economic Regions of Alaska

  32. Basic Sectors with Growth Potential • Petroleum • Tourism • Mining • International Air Cargo • Footloose Services • Military

  33. The Post-Prudhoe BluesMarket Value of Oil (and other resources)

  34. Natural Gas Projects: Construction Jobs(Total Man Years)

  35. MAP MODEL PROJECTION: JOBS

  36. Alaska Economics • The Structure of the Economy • Recent Economic History • Population Trends • A Look to the Future • State Finances • Chronic Overspending • The Economic Regions of Alaska

  37. Alaska State Finances:PC State and Local Govt Spending Highest in the Nation

  38. Alaska State Finances:The State Budget Pie

  39. Alaska State Finances:GF Oil Revenues Have Fallen with Production Decline

  40. Alaska State Finances:Other GF Revenues Insensitive to Growth

  41. Alaska State Finances: Expenses > Revenues = Fiscal Gap

  42. Alaska State Finances:Draws from the CBR Balance the Budget--Temporarily

  43. Alaska State Finances:Permanent Fund Growth has Offset Declining Oil

  44. Alaska State Finances: Permanent Fund Earnings is the Biggest State Revenue Source

  45. Alaska Economics • The Structure of the Economy • Recent Economic History • Population Trends • A Look to the Future • State Finances • The Economic Regions of Alaska • Urban, Maritime, Interior

  46. Alaska Regional Economics: Most Jobs are in Urban Alaska

  47. Kenai Economic Base

  48. KENAI Real Personal Income:Growth Since 1990

  49. Special Characteristics ofRural/Native Alaska • 13 Regional Native Corporations • Village Corporations, Tribal Councils, Local Govt • Small, widely scattered communities – off roads • Mixed economies—cash and subsistence • Narrow economic base • Limited employment in market economy

  50. The Larger Rural Alaska Villages

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