Sales revenues suggest slight slump

Sales tax data made available this month suggest a slight dip in local consumer spending.

The news comes at a time when the region's economy appears to be fragile. Earlier this fall, Southeast Conference released its annual By the Numbers economic report, which found 2016 to have been the first time since 2007 that jobs and earnings were both down from the previous year. The labor force had declined by 434 net jobs, bringing the total number of positions to 45,260 regionally.

The dip accompanies declines in state spending on municipalities over the past five years, as attempts to trim Alaska's budget lag behind its multibillion-dollar spending deficits. While the Legislature has cut the budget by over 40 percent since 2013, more sharply declining revenue from its oil production – which has provided around 90 percent of the state government's total income – over the same period has been draining its cash reserves. Capital spending has taken the largest share of cutbacks as a result, with agency cuts across the board affecting employment and services.

While state government jobs bore around 10 percent of total losses last year, the likewise crucial seafood sector has also taken hits to larger fisheries. In a November monthly analysis, the Alaska Department of Labor estimated harvesting employment in 2016 had declined by 2.3 percent over the previous year, and was the third straight year of decline. Growth in smaller fisheries did see some positives, but have translated into only a handful of jobs.

With these figures in mind, consumer activity in Wrangell has dipped slightly over the past two years. Looking over sales tax data from the last fiscal year, starting in July 2016 and ending June 30, the municipality's seven-percent take from local purchases showed a 1.6-percent decline over the 2016 fiscal year's totals, and had declined by 2.8 percent since FY15.

However, the 2014-15 fiscal year had been a high point, with the city collecting $2.68 million in sales taxes from local merchants. Looking back at the past 12 years of data, the last four years indicate a relatively stable plateau, and this latest year's returns are 25 percent higher than those in FY06 had been.

Still, it can be difficult to accurately gauge how the local economy is doing. City finance director Lee Burgess explained sales taxes are an imperfect representation of economic health because of its caps and exemptions. In Wrangell taxes on individual sales are capped at $1,500, while small sales and services that do not exceed $200 per year in total are also exempted. This means for both large and small transactions, for sales taxes some amount of economic activity would be lost in translation.

In part because of the cap but also because of spending habits, a large share of sales tax revenue comes from the town's two grocery stores.

For Bobs' IGA, owner Bob Robbins said business has been basically steady, with marginal growth.

"You can look at my sales last year to this, and it's probably one percent," he said.

Benn Curtis of City Market noticed a similar trend. "Basically some months have been up a bit, other months have been down," he said. Overall, he estimates his sales over the past year have been stable, perhaps even down slightly. "It's not a big down, but it's a down."

He hypothesizes a poor fishing season for salmon in 2016 and an average one this past year have both had an effect, as did the year's disappointing crab seasons, and was felt most during the winter months. Trident Seafoods, one of Wrangell's two primary seafood processors and a major summertime employer, had last year wound down its local operations early in the summer as a result of the meager pink salmon run.

"The winter was the pits," Curtis commented, as a result. Trident similarly wrapped up its season early this summer, which he suspected could likewise put a damper on the coming off-season.

Curtis noticed that the most stable sector in terms of spending seemed to be from government employment, at the municipal, state and federal levelsl. The downturn among fishermen and processors notwithstanding, a slowdown among boatyard activity last winter also seemed to affect people's spending.

Among most consumers, Curtis detected more frugal shopping habits. "They're buying the ads a lot more than they used to," he said.

"I don't think the economy is getting worse, I just think people are spending their money in different ways," said Robbins. In particular, local retail seems to be competing increasingly with online sellers such as Amazon, while people also supplement their pantries with purchases from Costco in Juneau.

However the economy is actually faring, the addition of new businesses to the community seems to bode well. A string of new businesses have diversified Wrangell's local economy this year, with several opening doors over the summer and fall.

Efforts by the Chamber of Commerce to boost sales, such as last weekend's Harvest Festival event or this weekend's Jolly Shopping, also help to keep money circulating locally, as do big-ticket incentives like the city's two yearly tax-exempt days.