Category Archives: economics

State budget cuts shouldn’t gut economy

By Jenny Neyman

Redoubt Reporter

Given the state’s fiscal crisis in the wake of low oil prices, it’s time for local governments to tighten their belts, but not so tight, Kenai Peninsula Borough Mayor Mike Navarre says, that it cuts off circulation.

“We have to make sure we have a plan. We don’t need to just look at where we’re at right now and overreact and panic,” Navarre said. “What we need to do is look at where we want to be five years from now and 10 from now, and put the tools in place and make the decisions now to help us get there.”

Navarre was one of the speakers at the annual Industry Outlook Forum held in Kenai last month. The borough is already feeling impacts of the state’s budget-cutting — capital funding from the state has declined from $15 million in fiscal year 2014 to $113,000 in fiscal year 2016 — and should expect more cuts to come.

Meanwhile, the borough has been tightening its spending, as well. Navarre said that, even though the peninsula’s population is increasing, the borough has seen a net loss of job positions since 1998, outside of education and public safety. He said that finances have been managed conservatively so that there is a fund balance in all borough budgets, including service areas. Additionally, the borough has the ability to raise its revenues, through tax increases, to compensate for state cuts, but Navarre said he doesn’t want to see things come to that.

“We’re already seeing a slowdown in the economy, and, so, it’s not really a good time to load taxes on anybody. Nobody likes to see tax increases,” he said.

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Southcentral hauls in impact from commercial fishing

By Jenny Neyman

Redoubt Reporter

An economic analysis of the value of commercial fishing in Southcentral Alaska held some surprises, even for the organization contracting the study.

The Alaska Salmon Alliance, with offices in Kenai and Anchorage, worked with the McDowell group to study the impact of commercial fishing in the region and took the results to the Legislature, with executive director Arni Thompson giving a presentation to the House Fisheries Committee on Thursday.

“We knew that there really was a rather cohesive industry in Southcentral but we knew that the public and the Legislature were rather unaware of it. … We found, the results, the numbers, it showed were rather astounding. We, ourselves, were unaware of the total impacts of the seafood industry,” Thompson said.

Commercial seafood is a $1.2 billion industry in Southcentral, Thompson said.

Southcentral is home to 5,730 resident commercial fishermen and crew, with another 4,590 jobs in seafood processing, and 520 jobs in hatcheries, fisheries management and other aspects. Total labor income in the region as of 2013 was estimated at $411 million.

“And we all know how important jobs are particularly now with the decline that’s occurring in the oil and gas industry,” he said.

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Peninsula well-positioned to weather state’s economic storm

By Jenny Neyman

Redoubt Reporter

The prevalent message at this year’s Industry Outlook Forum was good news, bad news.

The two-day event, put on by the Kenai Peninsula Economic Development District, brought together speakers representing various sectors of the Kenai Peninsula’s economy.

Alyssa Rodrigues, economist with the Alaska Department of Labor and Workforce Development, kicked things off Thursday morning. With her statewide perspective she called herself a bit of a Debbie Downer, as state government faces a fiscal crises in the billions of dollars. But she had happier news for the peninsula.

“So, the Kenai Peninsula typically outperforms the state. And it moves with the state, so when the state sees rough times, the peninsula typically does, as well, but it doesn’t seem to be impacted as badly as the state,” Rodrigues said.

The jobs outlook for the state forecasts a decline of .7 percent in 2016, which isn’t rosy, Rodrigues said, but less than a percentage point isn’t terrible, either. The peninsula is looking at even less of a jobs decline of .4 percent.

When oil prices last took a dive in the 1980s and the state plunged into a recession, the peninsula declined, as well, but has since seen more growth than the state. That could be a good thing, or a not-so-good thing.

“The question then is, is the Kenai going to do better because of all that growth that happened, or is it just that much further to fall?” Rodrigues said.

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Growing the economy — agriculture flourishing on Kenai Peninsula

Redoubt Reporter file photos. Kenai Peninsula growers are finding high tunnels effective for Alaska-hardy produce as well as more exotic fare, such as corn and fruit trees.

Redoubt Reporter file photos. Kenai Peninsula growers are finding high tunnels effective for Alaska-hardy produce as well as more exotic fare, such as corn and fruit trees.

By Jenny Neyman

Redoubt Reporter

When people think about the economy of the Kenai Peninsula, it’s usually oil and gas, fishing, and maybe education, health care or government. But there’s a growing trend to add another sector to that list — farming.

“These are not hobby farmers, these are hard-working folks. They are investing in infrastructure, they are buying equipment, they’re building storage, they’re building refrigeration for peonies, they’re putting up more high tunnels planting more. These folks are thinking ahead, and I think the rest of us should, as well,” said Heidi Chay, manager of the Kenai Soil and Water Conservation District, speaking at a Kenai Chamber of Commerce meeting Dec. 16.

Commercial agriculture is typically thought of on a big scale, but the Kenai Peninsula is growing its own agricultural revolution, one small operation at a time.

“Today the farms that are making headlines are the small farms under 10 acres, very likely under 5 acres,” Chay said.

From 2007 to 2012, there was an 11 percent increase in the number of farms statewide, and a 62 percent increase in the number of farms selling direct to consumers. On the Kenai Peninsula, farm numbers increased 30 percent in that time frame, and direct-selling operations have increased 111 percent.

A lot of that increase is due to high tunnels. The Kenai Peninsula has the highest number of high tunnels per capita in the country.

“If you don’t know already, this technology has transformed farming and food production in this state,” Chay said. “We can grow crops that we couldn’t grow easily here before. And these high tunnels lengthen the season significantly enough that farmers can harvest earlier than ever before, allowing them to put in a second crop, or even a third.”

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Pare down, don’t panic — Sen. Micciche advocates budget belt tightening

Photo by Jenny Neyman, Redoubt Reporter. District O Sen. Peter Micciche gives a legislative update to a packed house of constituents at the George A. Navarre Borough Building in Soldotna on Friday.

Photo by Jenny Neyman, Redoubt Reporter. District O Sen. Peter Micciche gives a legislative update to a packed house of constituents at the George A. Navarre Borough Building in Soldotna on Friday.

By Jenny Neyman

Redoubt Reporter

Sen. Peter Micciche’s message regarding the state budget was one of glass-half-full optimism. The state’s financial cup won’t be running over anytime soon, he told constituents at a town hall meeting in Soldotna on Friday, but as long as cuts are made and spending is reduced, it won’t be running empty, either.

“We’re in pretty good shape. The efforts that we’re making now are to make sure that we stay in good shape,” he said.

The District O senator, who won re-election in November, reminded the packed crowd in the assembly chambers at the George A. Navarre Borough Building that the state has seen worse financial times, but that the current situation needs to be addressed head on.

“Back in ’81, we were much higher than we are right now (in spending). The reality of it is we had no savings and we were in a lot more challenging position than we are today. We’re going to be OK. We have a bright future and plenty to celebrate,” Micciche said.

The state has about $70 billion in the bank, Micciche said, plus predictions of future petroleum revenues. But with oil prices currently down around $50 a barrel, the fiscal year 2014 projections estimate a $3.4 billion shortfall in the state budget, with another $3.5 billion deficit expected for fiscal year 2015.

“The fact is we’re overspending right now. We need some trimming and we can all pull it into line once that occurs,” he said.

Micciche outlined his financial priorities, including setting sustainable operating and capital budgets and a forward operating plan, working to bring North Slope natural gas to terminus in Nikiski, establishing a statewide energy plan, focusing on essential services the state is constitutionally mandated to provide, and reining in capital spending.

“Unless it’s something that comes with a federal match or federal funding where we need our capital in as the match, it’s going to be a year without capital,” he said. “… And then, making difficult choices — I need to hear from all of you on a regular basis about what’s important to you. What’s important to you is what’s important to me. It’s not about Peter, it’s about all of you.”

Several people spoke up at the meeting about programs and projects they wanted spared or funded — including reinstating money from snowmachine registration fees that goes to trail grooming organizations — including the Caribou Hills Cabin Hoppers, sparing the Youth Court program, maintaining Alaska State Trooper staffing levels and providing fire suppression at the Ninilchik harbor.

Micciche cautioned that if budgetary belt-tightening isn’t enough to close the fiscal gap, then increasing revenue might be necessary. Utilizing Alaska Permanent Fund earnings, for instance, should be discussed.

“If the price of oil stays low and you all demand services above what we can afford, that’s one of the things you’re going to have to think about,” he said.

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Nonprofits cause big economic benefit — Report shows Alaska organizations need to adapt to meet challenging climate

By Jenny Neyman

Redoubt Reporter

Dennis McMillian is part economist, part biologist and part Revolutionary War figure as he reaches out to nonprofit organizations in the state.

“I actually spoke to almost every chamber and every rotary in Alaska (in) 2010, 2011, like Paul Revere, trying to prepare people,” he said.

McMillian is the retiring president of the Foraker Group, formed to support nonprofit organizations in Alaska. He spoke to the Kenai and Soldotna chambers of commerce Wednesday in Kenai. Foraker has been tracking and analyzing data about Alaska’s nonprofit sector, and in 2010 saw trouble on the horizon.

A funding crisis was looming. The state’s nonprofits were overly dependent on governmental grants, in a federal climate that was clamping down on earmarks and Bridge-to-Nowhere-type projects, and in a state where a disproportionately large percentage of the budget is supported by a price-volatile commodity.

“We started preparing the nonprofit sector back in 2010-2011 that the day of $100-a-barrel oil was not going to last forever,” he said.

At the same time, there were simply too many nonprofits in the state to be sustainable — one for every 100 Alaskans, whereas the national average is one for every 200 Americans. Not only does that create competition for resources when money is no longer flowing as freely as it had in boom times, but there are only so many people willing and able to run nonprofit boards.

“Our best guess is there’s probably 20, 22 people to find nine or 10 good people to serve on every board in Alaska. That’s not sustainable. So we call that the crash of the herd. We just said the population is too dense for the ecosystem and that we were not going to survive,” he said.

So McMillian took the message on the road, advising nonprofits to find a new way to swim, before these factors caused them to sink.

“Three years ago I sounded an alarm, every way I knew how to do it. I screamed at the top of my lungs. And guess what? People actually listened. There’s this tendency to think, ‘Well, we’re not going to act until it’s too late,’ kind of like we did with our state budget. Well, it seems to me that our nonprofit sector are the most progressive business leaders in the state, because they heard this data three years ago and did it,” he said.

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What’s right in water rights? Sen. Micciche gives wide-ranging update on session

By Jenny Neyman

Redoubt Reporter

District O Sen. Peter Micciche, in a town hall meeting Saturday at the George A. Navarre Borough Building in Soldotna, said he was proud to have some of the most active and vocal constituents in the state, and that his door and ears continue to be open to discuss whatever is on constituents’ minds.

“I think I’ve proven that no matter how much you disagree with me I’m here to listen to you. And that’s OK if you want to talk about any of the tough issues you disagree with, conflicts that you think I have, you disagree with how I vote on something — I’m wide open. I’m always here,” he said.

Constituents took him up on that Saturday, listening to Micciche’s update from Juneau on a wide variety of topics and widening the scope of discussion even more in their questions.

HB 77 — water reservations

One of the hottest topics of the afternoon was House Bill 77, a Parnell administration revamp of land use management regulations. The bill stalled in the Senate last year, with Micciche being one of the ones hitting the brakes, and has garnered stiff public opposition. District O constituents at Micciche’s previous town hall meetings in Homer and Soldotna turned and spoke out in force against the bill, and addressed it again Saturday. A tweaked version of the bill was submitted Monday to the Senate Resources Committee and will come up for public testimony Wednesday.

Speakers on Saturday were skeptical that the new version would go far enough to address concerns that the bill was limiting the rights and involvement of Alaskans in the permitting process, and they were particularly leery of only getting two days to review the new version of the bill before public testimony.

“That bill, anybody who’s looked at it, you kind of need to be a lawyer or know one to understand it. I think it would be great if we had more time to look at it and comment on it,” said Dave Atcheson, of Sterling.

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Filed under budget, ecology, economics, fishing, industry, Legislature