Southeast Conference held its annual Mid-Session Summit in Juneau last week, turning the region’s attention to the state of its economy as legislators reach the mid-point of their 2018 regular session.
For much of it, the outlook is pretty grim. Indicators since 2014 put the region’s population and jobs on a worrisome decline, along with earned income.
“We’re just taking a hit in almost every way you can imagine,” explained Meilani Schijvens, a consultant to SEC and a former executive director.
Faced with continued multibillion-dollar spending deficits as the price and production of oil in Alaska has fallen, for the past four years the Legislature has failed to adopt a fiscal solution, instead waiting out the downturn on savings with operational cuts. But trying to cut its way out has left the economy wounded, in Southeast worse than average. Fourteen percent of state jobs in the region have been cut since 2014, Juneau consultancy Rain Coast Data estimates, with 750 jobs adding up to a loss of $46 million in earned income.
The loss of stable public input has been accompanied by steep declines in the seafood industry and construction sector. Adjusted for inflation, since 2015 value for landed seafood has been the worst of any point in the last decade, and fishing and seafood jobs have declined by 19 percent as a result. Spending cuts to organizations and municipalities have correspondingly left a mark as well.
Not all is dark and gloomy with the economy though, with jobs in the ship building and repairs sector rising by 39 percent over the same period, and employment in tourism steadily rising since 2014. And expectations for the cruise industry continue to climb. Cruise Lines International Association Alaska President John Binkley informed SEC the state will be setting records this year and next, with 1.31 million cruise passengers for 2019. That would be a 12-percent increase from 2018, which itself is a seven-percent increase from 2017. Over the next two years Binkley anticipates an increase of $137.5 million in passenger spending.
The bulk of these visitors will be headed to Southeast Alaska, centering on Juneau. But there is opportunity for visitation elsewhere, and to coordinate the influx Juneau city manager Rorie Watt last week arranged a first meeting of the Southeast Cruise Port Assembly, a sort of subcommittee under the SEC Visitor Committee.
“Wrangell might see additional passengers,” said Julie Decker, a Wrangell Assembly member who attended SEC’s summit. “That’s pretty big news.”
Decker and City Manager Lisa Von Bargen both represented the city at last week’s meeting, which 250 people attended.
“It’s the biggest mid-session summit we’ve had in a decade,” Schijvens estimated.
Often held in March, SEC’s Mid-Session Summit intends to coincide with the middle point of the legislative session. But with lawmakers looking at meeting only a 90-day session this year, Schijvens explained SEC took the step of moving its own conference back to suit the shortened schedule. The move was a first for the organization, one whose timing is intended to keep the agenda more relevant.
With a full plate to get through in only a few days, a host of speakers delivered “micropresentations,” condensed outlooks on various facets of the region’s economy.
Plenty of discussion at the conference revolved around reform of the Alaska Marine Highway System. SEC had been tasked by Gov. Bill Walker’s office in 2016 with organizing a statewide planning process to improve the ferry service’s long-term viability. A 12-person steering committee was formed to direct that effort and has since devised an organizational model it feels would better meet the state’s transportation needs in the longer term.
Last fall it put forward a proposal to form a public corporation to manage a leaner ferry fleet, similar to how the Alaska Railroad is organized. Under this model AMHS would continue to have access to federal funding sources while operating more autonomously from state political influences. Becoming a public corporation would also enable the service to issue revenue bonds, leveraging its fares and other revenue.
Von Bargen explained the reform effort was entering its third phase now, that of reaching out for public support to implement the proposed changes. A big sell that will be critical to the system’s survival will be ensuring it is forward-funded. Under its current allocation structure AMHS is locked into the state’s regular budget cycle, which starts up July 1. Well ahead of each summer season the ferry puts out a schedule based on funding assumptions that may or may not be realized. Unforeseen reductions in funding or maintenance needs can lead to the rescheduling or cancellation of bookings, disrupting ridership and ultimately losing revenue in the process.
“This idea of forward-funding is so important,” Von Bargen emphasized.
Among other actions taken during the summit was the creation of a special subcommittee on art within the Economic Development Committee. Its role, particularly that of indigenous artwork, is a segment of the region’s economy SEC has come to focus on increasingly in recent years. One intent of the new subcommittee would be to raise awareness of Alaska Native artforms among a broader audience, building a following and a market. The subcommittee would look for inspiration to analogous models such as the Southwestern Association of Indian Arts in New Mexico, which supports a vibrant art economy centered around Santa Fe each summer.
Along with forming the special subcommittee, SEC voted in favor of drafting a letter to online arts retailer Etsy, expressing its opposition to the site’s ban on the sale of fur- and ivory-based goods. The ban on fur-based items was recently reversed by Etsy, but the letter would nonetheless support the efforts of the Northwest Coast Arts Initiative to allow at least Native artists the opportunity to sell their wares.
Meanwhile, while in Juneau Wrangell’s representatives took time to make their rounds in the capital. Von Bargen and Decker met with counterparts at the departments of Transportation and Environmental Conservation, to get updates on Evergreen Road improvements and the Byford junkyard monofill, respectively. Von Bargen said they had also met with the city’s lobbyist and its representation, Rep. Dan Ortiz and Sen. Bert Stedman, both to highlight the list of legislative priorities the Wrangell Assembly approved last month and learn the latest on the budget.
The two also attended the Alaska Federation of Natives’ February meeting last week, where its members discussed possible support for developing a residential accelerated high school in Wrangell under the Alaska Native Science and Engineering Program. At its November meeting, ANSEP had tabled a resolution backing the concept. While the state’s largest Native organization discussed the item last week, it again chose to table it until its meeting scheduled for May.
“The board had a good discussion on the issue,” Von Bargen recalled. She gathered a proposal would be better received if it had a less jurisdictional direction, focusing more generally on developing the program statewide. She said members had also expressed concerns about a residential school’s impact on diverting students from smaller schools in Alaska’s rural reaches, as well as the legacy left over from Wrangell’s former Institute boarding school.
“What we expressed to them was a need to do considerably more due diligence,” Von Bargen relayed. With concerns of its own, if the borough can determine whether the ANSEP project is a sustainable one for Wrangell it will likely bring back a more generic proposal for AFN to consider.
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