Alaska - The Future

This is not intended to be a political discussion but a discussion of the future in Alaska because of recent political events. 

     As most of you may know, Uncle Ted, the senior senator from Alaska was defeated in the recent election, by Anchorage Mayor Mark Begich. Uncle Ted was/is known as the King of Pork, when it came to earmarks and other special funding for Alaska, especially the military and transportation. This was a close election due to many voters understanding the ramifications of a change in senators for Alaska, even though Uncle Ted had recently been convicted of seven felony charges.

   The federal government is the largest employer in Alaska with most employees working with/for/through the military.  IMHO the military presence in Alaska is at least double of any rational staffing. This is going to change in the next few years I believe. It will take the majority of the two year federal budget cycle to start having noticeable effects.

  Alaska is an unusual state, in that the local resident population pays no taxes to support the state services.  Taxes and fees on the oil industry still generate approximately 90% of all state revenues.  I believe that with the Alaska based troops (about 30,000) and their dependents (another 60,000 folks), mostly in the Anchorage area, are subject to being reduced.  Unless the cold war heats up again with the Russians, there is little reason to keep over about half of those troops in Alaska. So whether the Alaska population is a half million people or half of that, the state revenues remain basically the same. Alaska is tied for having the lowest state gasoline taxes in the nation. The Coast Guard and the National Park Service will be about the only two federal agencies that will not be affected.

  So what will the loss of 45,000 people from the Anchorage area mean?  Actually it will be of little impact to the state, since those people don’t pay state taxes anyway.  The state revenues won’t change.  There will be less population in the state sharing in the revenues, the PFD checks will go up, since there will be fewer citizens receiving the checks each fall from the state.

  Now on a local level it will be very devastating to many businesses, housing rentals, etc. and to many of the civilians that work on the bases and lose their jobs. A loss of jobs directly tied to the military, such as school teachers that work with military dependents. A loss of 8,000 + or – students from Alaska school districts would create enormous problems for many, especially in Anchorage where most attend school..  There would have to be significant staffing reductions in many areas of services, police, fire, ambulance,  Sure pleased that we got out of the apartment rental business, a couple of years back, in Anchorage.

Anchorage in many ways is different from most large cities, 300,000 + or – population in that it is in effect, a bedroom community for the federal/state/local employees.  In most states the large cities contribute value added services to products.  Most have industry, build, refine, manufacture items, etc.  Not true for Anchorage as the city has almost zero manufacturing.  Even though Anchorage does not contribute much, if any, tax revenues to operate the state government, it is the largest consumer of state tax dollars in Alaska.  The money comes from the bush (oil, mining, fishing, timber) and gets spent in Anchorage where approximately half the state residents reside.  Somewhat like a reversed Robin Hood scheme. LOL Take from the poor and give to the rich.  Because Anchorage contributes little or nothing to the rest of the state, if it could be picked up and moved , it would probably take some time before the rest of the state noticed. LOL 

  A good example of pork  is the Clear Air Force Station in Anderson, just SW of Fairbanks a couple of hours drive.  It is an old facility that runs “over the horizon looking” giant radar domes. But the military satellites circling the earth do the same job.  Numerous times in the past there has been talk of closing Clear AFS but Uncle Ted has always put a stop to that idea. My current thought is that any civilians, that works at that facility should be getting their resumes dusted off and ready to send elsewhere. I have a number of friends that work at Clear and I hope they have enough years in to just retire if it closes.     

  The base is the only provider of a reason, for the town of Anderson to exist.  The civilian housing market will totally collapse and make homes un-saleable in that general area.

  Hopefully the change will awaken the powers to be in Alaska, to the importance of the tourist industry, especially the RVing group, as we are the only section of tourism that supports local businesses, etc. Most of the tour industry keeps the money they make hauling people to/from and in Alaska out side, where ever their home office is located, be it Seattle or elsewhere.

  However this change will lead to a less transient population and place more scrutiny on elected officials, IMHO.  With the current 65% turn over in Alaska's population every 5 years, this has been difficult to do in the past.  Most voters in Alaska that vote for an official, will not be there when that same official is up for re-election the next term. 

  The proposed gas pipeline from the North Slope could slow down the decline in population for a number of years, if handled correctly. 

  Alaska residents and visitors, should also get used to the idea of paying personal taxes to the state, as it is on it's way, as soon as the oil revenues no longer feed the "trough" that the elected officials need for spending t get themselves re-elected, i.e. a state income tax, sales tax, property tax, etc.  Since my personal income is derived from Alaska, my retirement and consulting work, I too will be paying those taxes, much to my dislike. (plus, I won't even get to vote on any of it/them making the decisions.)

  I expect to see the state legislature, as soon as this sinks in on them, to come up with new schemes to get the population to vote to do away with the personal  PFD (Permanent Fund Dividend) checks each year.  They will want to get this voted upon before the temporary residents move from the state. They will IMHO push for a one time, large/end all, payment of $10,000 to $20,000 to every resident to end the PFD program and it just might pass. Voters that know they are leaving the state soon, just might vote to accept the large one time payout for every family member. This would funnel the interest money earned from the Permanent Fund, into the state coffers for the legislature to spend instead of being given out to the residents.

  Interesting days are ahead for Alaska and those living there. Whether or not Anchorage/Fairbanks will get down to their pre-pipeline days (early 70s) in population will remain to be seen.

 

Alaska - the job facts:

As Sgt. Joe Friday used to say on Dragnet:  “just the facts ma’am, just the facts”

 

  The nationwide average of federal jobs, compared to all others is about 2.3%.  In Alaska this figure rises to almost 40% or about 1 out of every 3 jobs in the state is federally funded.  This translates into approximately 96,000 federal jobs in Alaska.  No other state even comes close to this figure, with the District of Columbia, (Washington) being the only governmental area that reaches that level of federal jobs.

In 2006, last good year for data I can find, the federal government spent $7.6 billion dollars in Alaska.  To compare, in South Dakota, a state similar in population, received $1.383 billion in federal spending. 

  The nationwide, per capita average spending by state, by the feds was $8,058.  Alaska received 71% more at $13,805 in per capita federal spending. When you add the federal jobs to the city, borough and state jobs, many of which are indirectly federally funded, there aren’t too many private jobs in the state.  Alaska receives, about twice as much, federal money as is paid to the federal government in taxes, from the state.

With the change in the US Senator, it is going to be difficult, if not impossible to keep the flow of federal money coming to Alaska as has happened in the last few decades of Uncle Ted.  Add to this, the current economic conditions in the US/world and the talk of bankruptcy from California, and other cities and states asking for more federal money to balance their budgets. It creates a very unfavorable political climate for Alaska, which is perceived as a “rich” state that can afford to give out cash each year (the PFD checks) to every citizen of the state.

A 10% to 20% reduction in federal money, to Alaska, whether it be in federal programs/employees or in project grants, could translate into a loss of 10,000 jobs in the state. I don’t believe that the majority of elected congress members are as enamored with Alaska as those of us on this section of the forum.  With Uncle Ted’s seniority in the Senate and chairmanships, there wasn’t much that could be done to stop the flow of extra money to the north country, now that has changed.

In the long run will the loss of jobs and population hurt the state?  Probably will depend on the individual and how they are affected by this. Someone said there are approximately 70 Alaska resident forum members, statistically that would imply that about 28 of them are federally employed or their spouse is at this time.  Only time will tell the outcome of this change in Alaska leadership in the US Senate.

I am guessing that the federal parks and campgrounds in Alaska are going to take a hit when the reduced federal money for Alaska is divided into the different spending categories.  I hope I am wrong on this but doubt I am.  Steering federal money into Denali NP doesn’t get a senator or representative re-elected in the state, steering money into Anchorage does. That is where the votes are in the state.