Legislature(2019 - 2020)BELTZ 105 (TSBldg)

01/29/2019 01:30 PM LABOR & COMMERCE

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Audio Topic
01:31:20 PM Start
01:32:11 PM Presentation: Department of Labor and Workforce Development, Alaska Job Forecast and Outlook
02:41:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Teleconference <Invitation Only> --
+ Presentation from the Department of Labor & TELECONFERENCED
Workforce Development:
2019 AK Job Forecast & Outlook by
Commissioner-Designee Ledbetter, Dan Robinson
Research & Analysis Division & Paloma Harbour
Administrative Services Director
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                        January 29, 2019                                                                                        
                           1:31 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Lora Reinbold, Chair                                                                                                    
Senator Mia Costello, Vice Chair                                                                                                
Senator Click Bishop                                                                                                            
Senator Chris Birch                                                                                                             
Senator Elvi Gray-Jackson                                                                                                       
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
PRESENTATION: Department of Labor and Workforce Development,                                                                    
2019 Alaska Job Forecast and Outlook                                                                                            
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
TAMIKA LEDBETTER, Commissioner Designee                                                                                         
Department of Labor and Workforce Development                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Introduced DOLWD presenters of the 2019                                                                   
Alaska Job Forecast & Outlook presentation.                                                                                     
DAN ROBINSON, Chief                                                                                                             
Labor Research & Analysis                                                                                                       
Department of Labor and Workforce Development                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Participated in the 2019 Alaska Job Forecast                                                              
& Outlook presentation.                                                                                                         
PALOMA HARBOUR, Director                                                                                                        
Administrative Services Division                                                                                                
Department of Labor and Workforce Development                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Participated in  the 2019 Alaska Job Forecast                                                             
& Outlook presentation.                                                                                                         
ACTION NARRATIVE                                                                                                              
1:31:20 PM                                                                                                                    
CHAIR  LORA  REINBOLD  called  the   Senate  Labor  and  Commerce                                                             
Standing Committee meeting  to order at 1:31 p.m.  Present at the                                                               
call to  order were  Senators Costello,  Birch, Bishop  and Chair                                                               
Reinbold.  Senator Gray-Jackson  arrived  as the  meeting was  in                                                               
Presentation:  Department  of  Labor and  Workforce  Development,                                                               
Alaska Job Forecast and Outlook                                                                                                 
 ^Presentation: Department of Labor and Workforce Development,                                                              
                Alaska Job Forecast and Outlook                                                                             
1:32:11 PM                                                                                                                    
CHAIR REINBOLD  announced that the  only order of  business would                                                               
be a presentation on the 2019  Alaska Job Forecast and Outlook by                                                               
the Department of Labor & Workforce Development.                                                                                
She welcomed Commissioner Designee Tamika Ledbetter to testify.                                                                 
1:32:39 PM                                                                                                                    
SENATOR GRAY-JACKSON joined the meeting.                                                                                        
1:32:47 PM                                                                                                                    
TAMIKA LEDBETTER, Commissioner Designee,  Department of Labor and                                                               
Workforce  Development  (DOLWD),  introduced DOLWD's  staff,  Dan                                                               
Robinson, Chief,  Labor Research  & Analysis and  Paloma Harbour,                                                               
Director,   Administrative    Services   Division.   Commissioner                                                               
Designee Ledbetter indicated she would  need to leave the meeting                                                               
1:33:36 PM                                                                                                                    
DAN  ROBINSON, Chief,  Research &  Analysis, Department  of Labor                                                               
and Workforce  Development, began  the presentation  by informing                                                               
members  that  the  main  function of  the  Research  &  Analysis                                                               
section is to produce statistics  in conjunction with the federal                                                               
government. He emphasized that his  non-partisan group's value is                                                               
to provide  an understanding  of the  data, including  drivers of                                                               
what has been happening.                                                                                                        
1:35:17 PM                                                                                                                    
MR. ROBINSON turned  to slides 1-2, titled "Three  Things to Know                                                               
about Alaska's Economy  Heading into 2019." He  stated that since                                                               
late  2015 the  state has  been losing  jobs and  has been  in an                                                               
economic downturn.                                                                                                              
1:36:23 PM                                                                                                                    
MR. ROBINSON reviewed slide 3,  titled "After 3+ years of losses,                                                               
modest growth forecasted in 2019,"  and briefly discussed the bar                                                               
graphs  that  highlight  Alaska Employment  Growth  2007-19.  The                                                               
figures represent  an average  monthly job  count over  the total                                                               
year. In 2007,  the state added one percent or  3,000 jobs to the                                                               
320,000  total   jobs  in  Alaska.   Although  the   U.S.  "great                                                               
recession" in 2009  did not affect Alaska  much, Alaska's economy                                                               
is  currently struggling  a bit,  he  said. He  reported that  in                                                               
2013-15  Alaska experienced  weak growth  and during  2016-18 the                                                               
state suffered  deep losses  when oil prices  plunged to  $28 per                                                               
barrel. These  losses diminished  in 2017 and  2018 and  the 2019                                                               
forecast  is for  a  0.4  percent growth.  In  response to  Chair                                                               
Reinbold, he agreed one percent equaled about 3,100 jobs.                                                                       
1:38:59 PM                                                                                                                    
MR. ROBINSON  turned to slide  4, titled "Assessing  the damage,"                                                               
and said  that in terms  of the timing  of losses, the  state was                                                               
below  employment levels  in October  2015, but  by December  had                                                               
piled up 39 consecutives months  of job losses, with a cumulative                                                               
total loss of 12,700 jobs since  2015, or 3.7 percent of the pre-                                                               
recession total. He  pointed out this does not come  close to the                                                               
job  losses Alaska  suffered  in  the 1980s  with  job losses  of                                                               
21,000 or  9 percent.  He commented that  job losses  were nearly                                                               
twice as bad in the 80s.                                                                                                        
1:40:30 PM                                                                                                                    
MR. ROBINSON  turned to slide  5, titled "Biggest losses  in oil,                                                               
professional   and   business.   serv.,  state   government   and                                                               
construction," noting the losses by industry jobs. Between 2015-                                                                
18, high-wage  oil and gas  industry dropped by nearly  5,000. In                                                               
2015, the  oil and gas  industry paid  out about $2.3  billion in                                                               
wages but  by 2017, oil  and gas  wages dropped to  $1.3 billion.                                                               
Meanwhile  professional  and  business services,  which  includes                                                               
professional  engineers and  geologists, were  adversely affected                                                               
not  only by  a  downturn in  oil and  gas,  but by  dramatically                                                               
reduced  state capital  budgets. State  government lost  2,300 of                                                               
its 23,000 jobs and construction followed with 2,100 lost jobs.                                                                 
He indicated some sectors experienced  job growth, such as health                                                               
care,  hospitality and  tourism,  and  local government.  Between                                                               
2015-2018,  the  health  care   industry  added  4,000  jobs.  He                                                               
reported that the  health care industry has  been a long-standing                                                               
growth industry  in Alaska, adding  more than 10,000 jobs  in the                                                               
last  decade. In  addition, the  leisure and  hospitality sector,                                                               
including  restaurants, bars  and  hotels, has  had positive  job                                                               
growth and the  tourism industry looks positive for  the next few                                                               
years, he said.                                                                                                                 
1:43:28 PM                                                                                                                    
MR. ROBINSON turned  to slide 6, titled "Less  health care growth                                                               
forecasted ? but  we've thought that before,"  and cautioned that                                                               
even though it seems like the  health care growth is ending, that                                                               
it  declined   in  2014  and   then  rose  between   2015-17.  He                                                               
acknowledged that the 2016 Medicaid  expansion has had an impact.                                                               
He predicted mild growth of 1.3 percent in 2019.                                                                                
1:44:27 PM                                                                                                                    
CHAIR  REINBOLD  asked  how  specific   figures  related  to  the                                                               
MR. ROBINSON  clarified that  the graph on  slide 6  provides the                                                               
percentage of change in the number  of jobs from year to year. In                                                               
2009, for  example, a five  percent increase of the  30,000 total                                                               
health care jobs equals 1,500 jobs, he said.                                                                                    
CHAIR  REINBOLD  suggested  that  one  percent  might  relate  to                                                               
different figures on different slides in his presentation.                                                                      
MR.  ROBINSON agreed  that the  percentage of  change relates  to                                                               
specific changes in  the overall base. He said  he reports either                                                               
numbers  or percentages  and sometimes  it is  difficult to  know                                                               
which will be more helpful to  report. He offered to provide data                                                               
in a  different format  if the committee  so desired.  In further                                                               
clarification, he said  Ms. Harbor explains that  the 1.3 percent                                                               
projection for 2019 translates to 500 additional jobs.                                                                          
1:46:44 PM                                                                                                                    
MR. ROBINSON  turned to  slide 7,  titled "Job  gains/losses have                                                               
varied  throughout the  state," stating  that some  areas of  the                                                               
state have  done better than  others.  He reviewed  statistics in                                                               
employment  changes between  2015-18 by  location. He  noted that                                                               
plenty  of North  Slope workers  live  in the  Mat-Su, Kenai,  or                                                               
Fairbanks.  The high-wage  jobs  that are  lost  affect the  area                                                               
where  workers  live.  During  2015-2018,  the  Matanuska-Susitna                                                               
Borough (Mat-Su  Borough) had  job gains  of 3.4  percent whereas                                                               
some areas  had job losses,  including reductions of  3.9 percent                                                               
in  Anchorage, 2.5  percent in  Juneau  and 2  percent losses  in                                                               
Fairbanks. He said the increases  in the Yukon-Koyukuk is not due                                                               
to [private sector]  wage and salary jobs but  increases in local                                                               
government. Of the 700 increased  jobs in Mat-Su, 450 were health                                                               
care  jobs, 100  related  to construction,  and  some were  local                                                               
government jobs, he said.                                                                                                       
1:48:33 PM                                                                                                                    
CHAIR  REINBOLD asked  him highlight  Bristol Bay  and the  North                                                               
MR.  ROBINSON  replied than  any  area  dependent upon  fisheries                                                               
tends to  swing. He  suggested that in  Bristol Bay,  either 2015                                                               
was weak  and 2018 was an  especially strong year, or  the timing                                                               
of  the fisheries  changed.  This  does not  mean  that the  area                                                               
experienced economic  growth but  merely reflects  that fisheries                                                               
fluctuate  from  year-to-year,  and  over  time  are  stable.  He                                                               
explained  that slide  7 illustrates  that  during 2015-2018  the                                                               
state  experienced  different  levels of  distress  by  location.                                                               
However,  he  did not  delve  deeply  into  the reasons  for  the                                                               
specific fluctuations.  He emphasized that  no area of  the state                                                               
escaped economic effects.                                                                                                       
1:50:13 PM                                                                                                                    
CHAIR  REINBOLD  asked  for further  clarification  on  the  26.1                                                               
percent reduction of jobs on the North Slope.                                                                                   
MR.  ROBINSON answered  that  this slide  shows  a percentage  of                                                               
change in Bristol Bay, the  Yukon-Koyukuk and the North Slope. In                                                               
further  response to  Chair Reinbold,  he agreed  that the  North                                                               
Slope had significant job losses of nearly $1 billion.                                                                          
1:51:56 PM                                                                                                                    
MR. ROBINSON turned  to slide 8, titled "The details  of our 2019                                                               
forecast."  The  forecasts  in 2019  for  several  industries  is                                                               
projected to  grow, including actual  growth during  2017-2018 in                                                               
the construction and oil and gas industries.                                                                                    
He turned to  slide 9, titled "Fairbanks will be  a bright spot,"                                                               
and  highlighted one  clear positive  in 2019  is Fairbanks.  The                                                               
biggest  contributing factor  will be  the arrival  of [two  F-35                                                               
Lightning  II fighter  jet squadrons]  with  an anticipated  $500                                                               
million  in  construction  spending,  900  new  off-base  housing                                                               
units, and 3,000 military personnel  [at Eielson Air Force Base].                                                               
He said there will also be  some additional activity at Clear Air                                                               
Station and Fort Greely.                                                                                                        
1:53:55 PM                                                                                                                    
MR. ROBINSON  turned to  slide 10, titled  "for much  more detail                                                               
(including  Anchorage  and  Southeast  forecasts),"  and  invited                                                               
members  to refer  to the  Alaska Economic  Trends. He  turned to                                                             
slide 11,  titled "Second ?,"  which stated that Alaska  has been                                                               
losing  jobs since  late 2015  and more  people have  left Alaska                                                               
than have moved here for six  straight years. He stated that this                                                               
has never  happened before.  He turned to  slide 12,  titled "Net                                                               
migration losses of 35,000+," and  pointed out from 2013-2018 the                                                               
state  has  had  35,000  more   people  leaving  the  state  than                                                               
relocating to  Alaska. He  reviewed the  slide that  showed fewer                                                               
people  leaving  Alaska  in  2018  than in  2013,  but  what  has                                                               
resulted in net migration losses  is that fewer people are moving                                                               
to Alaska.  For example, in  2018, 38,630 people moved  to Alaska                                                               
as compared to 50,626 moving to Alaska in 2013.                                                                                 
MR. ROBINSON turned to slide 13,  titled "The long view of Alaska                                                               
migration flows,"  which showed the population  change for Alaska                                                               
1947  to 2018.  He stated  that the  state's population  has been                                                               
stable  during a  period of  job loss,  which is  one reason  the                                                               
housing market has held up as well  as it has. He referred to the                                                               
graphics  on the  slide,  noting  that the  blue  line shows  the                                                               
natural  increase  over  time.  He  said  this  slide  shows  the                                                               
migration trends  in and out  of the state, including  the effect                                                               
of  military,  pipeline  construction,   and  base  closures.  He                                                               
pointed  out that  the  chart  shows the  six  years of  Alaska's                                                               
recession  and  gives  the  numbers   context,  noting  that  the                                                               
population losses are not insignificant ones.                                                                                   
1:58:16 PM                                                                                                                    
PALOMA  HARBOUR,  Director,   Administrative  Services  Division,                                                               
Department of  Labor and  Workforce, said there  is an  impact to                                                               
Alaska's  population  based  on   how  Alaska  is  performing  in                                                               
comparison  to  the rest  of  the  U.S. Currently,  the  national                                                               
economy  is healthier  than Alaska's  economy and  Alaska is  not                                                               
attracting  people. During  the U.S.  recession it  was just  the                                                               
opposite and more people moved to Alaska.                                                                                       
1:59:11 PM                                                                                                                    
MR. ROBINSON said  the DOLWD has found people move  for a variety                                                               
of reasons,  but the  main reason  people move  is for  jobs. For                                                               
example,  out migration  was low  in 2010.  People who  reside in                                                               
Alaska  tend to  look for  jobs in  Alaska, she  said. Currently,                                                               
people in the  Lower 48 who have always wanted  to live in Alaska                                                               
can  research  Alaska's [sluggish]  economy  and  based on  their                                                               
findings  be less  likely  to move  to  Alaska. The  relationship                                                               
between  Alaska's job  market and  the U.S.  job market  is often                                                               
similar;  however,  plenty of  times  Alaska's  economy has  been                                                               
strong and the U.S. economy has been weak or vice versa.                                                                        
2:00:25 PM                                                                                                                    
MR. ROBINSON  turned to  slide 14,  titled "Migration's  a bigger                                                               
factor  here  than in  other  states,"  stating that  this  slide                                                               
depicts that  migration is  a factor  in Alaska  more so  than in                                                               
other states. This  slide covers a 26-year period  and shows that                                                               
Alaska  has had  a larger  gross  migration flow  than any  other                                                               
state.  Michigan,  Ohio,  and California  fall  below  4  percent                                                               
migration  flow, but  Alaska leads  at 12  percent, so  migration                                                               
affects  Alaska more,  he said.  He related  some reasons  Alaska                                                               
attracts people,  but that Alaska's  inclement weather  can repel                                                               
some people.                                                                                                                    
MR. ROBINSON  turned to slides  15-18, related to  net migration,                                                               
beginning with "What age groups  find AK most attractive?" Alaska                                                               
has typically  sent more college  age people  to the Lower  48 to                                                               
school than  it attracts, which  has been a pattern.  He reviewed                                                               
the net migration by age and  logical reasons for it, noting that                                                               
the 15-19 age  group net migration is  consistently negative, and                                                               
that  seniors  often  tire  of the  weather  and  retire  outside                                                               
Alaska.  Early 20-year-olds  are  attracted  to hiking,  fishing,                                                               
hunting and adventure that Alaska  offers. He turned to slide 18,                                                               
titled  "There's a  connection here,"  noting that  when families                                                               
move  it affects  the  parent's  age group  and  the youth's  age                                                               
group. He related reasons to  leave Alaska include lifestyle, the                                                               
quality of Alaska's schools and crime.                                                                                          
2:04:33 PM                                                                                                                    
SENATOR COSTELLO  asked for the  agency's definition of  jobs and                                                               
if he considered fulltime jobs, part-time and seasonal jobs.                                                                    
MR. ROBINSON  answered that he  defined a  job as one  that lasts                                                               
for a full year and includes fulltime and part-time jobs.                                                                       
2:05:21 PM                                                                                                                    
MS. PALOMA  clarified that the  DOLWD data  defines a job  as any                                                               
job that earns salary and  wages covered by unemployment, but the                                                               
definition does not include self-employment  or the military. The                                                               
figures are averaged over 12 months, she said.                                                                                  
MR. ROBINSON clarified  that a tourism or fishing  job that lasts                                                               
3-4 months  shows up in the  data as one-fourth of  an annualized                                                               
2:06:17 PM                                                                                                                    
SENATOR  COSTELLO asked  whether factors  other than  jobs affect                                                               
migration,  for example,  crime or  earthquake damage.  She asked                                                               
how the department determines the  reason people leave Alaska and                                                               
if it conducts exit interviews.                                                                                                 
MR. ROBINSON said the United  Van Lines has conducted studies for                                                               
over forty years,  although its survey did not  include Alaska or                                                               
Hawaii.  The  study categorized  reasons  people  move ranked  in                                                               
order of  jobs, retirement, and  lifestyle, which  includes crime                                                               
and education, family,  and health. The department  does not know                                                               
for certain  why people move  to or  from Alaska, but  the agency                                                               
does look for patterns.                                                                                                         
2:08:11 PM                                                                                                                    
MS.  PALOMA suggested  that the  age range  may provide  a better                                                               
MR. ROBINSON agreed.                                                                                                            
2:08:50 PM                                                                                                                    
SENATOR COSTELLO asked him to  explain the comment that the aging                                                               
population is the  largest growth when he  mentioned many seniors                                                               
leave Alaska.                                                                                                                   
MR. ROBINSON said  the senior population tend to  be baby boomers                                                               
who  came  to Alaska  in  the  70s and  80s  for  high wages  and                                                               
pipeline jobs.  He said  many of  them are  "aging in  place" and                                                               
these seniors staying in Alaska  represent the larger determining                                                               
factor for the age group.                                                                                                       
SENATOR  COSTELLO, referred  to the  nursing shortage,  and asked                                                               
him to predict health care jobs.                                                                                                
MR. ROBINSON  agreed that health  care will continue to  lead the                                                               
job  growth,  noting home  health  aides  are projected  to  grow                                                               
faster than other occupations.                                                                                                  
2:10:48 PM                                                                                                                    
SENATOR BISHOP  pointed out that the  Alaska Workforce Investment                                                               
Board provides information to the department to analyze.                                                                        
MR.  ROBINSON said  that plenty  of foundational  information and                                                               
data support  the DOLWD's  forecast. He  said the  department can                                                               
provide concrete information  on how many jobs are  in Alaska and                                                               
how  much Alaska  employers  paid  out in  wages,  but it  cannot                                                               
definitively identify the reasons people stay in the state.                                                                     
MS.  PALOMA said  the  agency performs  a  10-year projection  by                                                               
industry  and occupation  in its  research and  analysis section,                                                               
which  considers  the  state's  aging  population  and  how  that                                                               
affects health care employment. She  referred to the October 2018                                                               
Trends for more details.                                                                                                      
2:12:34 PM                                                                                                                    
MR. ROBINSON turned to slide 20,  titled "Last three years of job                                                               
growth by  state," and said that  Alaska has lost more  jobs as a                                                               
percentage of its  total than any other state.  He reviewed other                                                               
states  that are  close to  Alaska's statistics,  including other                                                               
oil states such as North Dakota and Wyoming.                                                                                    
2:13:29 PM                                                                                                                    
MR. ROBINSON turned  to slides 21-24, titled  "There's more going                                                               
on than oil," that indicates  Alaska's total employment gains and                                                               
losses during 2015-18.  He highlighted the recession  in 2015 and                                                               
noted  that in  2016 Alaska  was still  losing jobs.  He compared                                                               
those statistics  to North Dakota  [slide 22], whose  six percent                                                               
of  losses were  significantly  greater than  Alaska's, but  that                                                               
state has seen  growth in 2018, which he thought  might be due to                                                               
agriculture or other factors.                                                                                                   
2:14:44 PM                                                                                                                    
SENATOR COSTELLO,  referred to  slide 20, and  said she  was more                                                               
interested  in the  states that  are  doing well.  She asked  why                                                               
Nevada, Utah, or Idaho have such  a high percentage of job growth                                                               
and if he  could talk about the effects  technology or permitting                                                               
has on growth.                                                                                                                  
MR. ROBINSON  said he did  not completely understand  the trends,                                                               
but  some  positive  patterns exist  for  inter-mountain  states,                                                               
including  Utah, Idaho,  and  Colorado, which  is  likely due  to                                                               
technology and  quality of  life. Other  states were  affected by                                                               
the "Great  Recession," including  Nevada, Florida,  and Arizona,                                                               
but  these states  have  had  a robust  rebound.  He agreed  that                                                               
studying "what is  working" is smart but he  also recognized that                                                               
business cycles  happen, and  other factors  may also  affect the                                                               
2:17:24 PM                                                                                                                    
MR. ROBINSON  turned to slide  23, titled "There's more  going on                                                               
than oil,"  and provided a  broad overview of  Wyoming's economy.                                                               
He said  that Wyoming lost a  higher percentage of its  jobs than                                                               
Alaska did, but Wyoming's recession  is now over, and its economy                                                               
has been  growing at  2.5 percent. Wyoming  has fewer  people and                                                               
less  oil  production  than  Alaska,  while  Oklahoma,  with  2.5                                                               
million people,  had a more  diverse economy and its  economy has                                                               
been growing since early 2017.                                                                                                  
2:18:41 PM                                                                                                                    
SENATOR COSTELLO  asked if there  was any  truth to the  rumor in                                                               
the Lower 48 that Alaska lags in economic trends.                                                                               
MR. ROBINSON replied that is not  true. In early the 80s Alaska's                                                               
economy was booming but the U.S.  was in a deep recession whereas                                                               
in the  late 80s, the trend  reversed. He said the  best response                                                               
is  to understand  different  drivers exist  and  oil prices  are                                                               
relevant. Alaska struggles  when oil prices are low,  but it does                                                               
well when oil  prices are high, which is the  opposite for states                                                               
in the Lower 48.                                                                                                                
2:20:49 PM                                                                                                                    
MR. ROBINSON turned  to slide 25, titled "A  study of state-level                                                               
recessions"  and to  pie chart  that  showed an  average for  all                                                               
states  from 1961-2016,  titled "How  Long Job  Loss Lasted,"  He                                                               
reviewed the percentages and duration  of job losses, noting that                                                               
17 percent  of the  time the  duration was less  than a  year, 60                                                               
percent of the time the duration  was 1-2 years, and 7 percent of                                                               
the  time the  recession  lasted  3-4 years.  He  said Alaska  is                                                               
currently  experiencing a  recession that  in 93  percent of  the                                                               
time would have been over.  He stated that recessions rarely last                                                               
more than 4 years.                                                                                                              
2:22:17 PM                                                                                                                    
MR. ROBINSON turned  to slide 27, titled "A  study of state-level                                                               
recessions."  He  said  that  this  chart  shows  that  economies                                                               
historically tend  to grow as  measured by job growth.  Almost 90                                                               
percent  of the  time  as a  state Alaska  has  been growing.  He                                                               
briefly  mentioned growth  in other  states as  a comparison.  He                                                               
said typically  some shock will  happen, the economy  will absorb                                                               
the shock, and economic growth resumes.                                                                                         
2:23:35 PM                                                                                                                    
MR.  ROBINSON turned  to  slides  28-31, titled  "So  why is  our                                                               
recession lingering?" He reviewed the  three reasons as listed on                                                               
slide 31, which read as follows [original punctuation provided]:                                                                
   • Uncertainty related to foundational questions about                                                                        
     the amount of state government we're going to have and                                                                     
     how we're going to pay for it.                                                                                             
   • Economic impact of the measures already taken.                                                                             
   • Additional costs that appear likely in our near                                                                            
2:25:50 PM                                                                                                                    
SENATOR  COSTELLO asked  him to  walk the  committee through  the                                                               
$1.6  billion in  state  budget  cuts assuming  it  would all  go                                                               
towards dividends.                                                                                                              
MR. ROBINSON answered  that he was not the best  person to answer                                                               
the question.  He said the  best data he  has seen on  that topic                                                               
was done by  the [University of Alaska (UAA)  Institute of Social                                                               
and Economic Research (ISER)] a few  years ago to show the short-                                                               
term  economic   impacts  of   the  various   options,  including                                                               
uncertainty  ranges  and  the effect  on  peoples'  behavior  for                                                               
decisions related to  taxes, cutting the budget,  or changing the                                                               
permanent    fund.     The    link     can    be     found    at:                                                               
SENATOR  COSTELLO said  an economist  came  before the  committee                                                               
last  legislature and  shared those  questions,  but she  thought                                                               
that was  a different environment  and at the time  the committee                                                               
was weighing options. Currently, the  state is considering a $1.6                                                               
billion reduction. She suggested  that perhaps Mr. Robinson could                                                               
return once  the governor's  budget is  released to  help explore                                                               
2:27:31 PM                                                                                                                    
MR. ROBINSON  responded that  he did  not think  he would  be the                                                               
right person to do so. He related  that there was not a talk of a                                                               
$1.6 billion cut  at the time the DOLWD did  its forecast because                                                               
it would have affected the  figures and growth. He suggested that                                                               
the basic  question would be  to ask  what happens with  the $1.6                                                               
billion and  if the  cuts are  to be  phased in.  He said  if the                                                               
legislature were  to cut  $1.6 billion from  the budget  that the                                                               
state would not experience any growth in 2019.                                                                                  
2:28:19 PM                                                                                                                    
MS. PALOMA  indicated that  the department has  some data  it can                                                               
share to help inform economic  analyses, but she serves on groups                                                               
that tend to do more of the scenario-driven analysis.                                                                           
MR.   ROBINSON  acknowledged   that  some   of  the   models  are                                                               
complicated, but it is important to  keep in mind that models are                                                               
simplifications. He agreed the proposed  $1.6 billion budget cuts                                                               
would   affect  the   10-year  forecast,   but  the   issues  are                                                               
complicated.  He  characterized  it  as  sophisticated  modeling,                                                               
noting  that it  shows  the  effect of  taxes  on incentives.  He                                                               
acknowledged that the permanent fund is unique to Alaska.                                                                       
2:29:47 PM                                                                                                                    
MS. PALOMA  said that obviously  a state budget cut  would affect                                                               
the state  employment projection,  but what has  been articulated                                                               
in  the  past  is  that  every option  has  an  economic  impact,                                                               
including implementing taxes or  adding more funding to permanent                                                               
fund  dividends  (PFDs).  Whatever   option  the  legislature  or                                                               
administration moves forward will have  an impact and it will not                                                               
be easy to predict the outcomes.                                                                                                
2:30:53 PM                                                                                                                    
SENATOR BISHOP  referred to  slide 3,  and said  between 2007-15,                                                               
not  only were  oil prices  good,  but the  state enjoyed  robust                                                               
capital budgets  and deferred  maintenance. He  said it  takes 10                                                               
years in Alaska  but only 60 days in North  Dakota from inception                                                               
to oil well  production. He further stated that  North Dakota has                                                               
oil  wells   on  private  land   and  does  not   have  stringent                                                               
environmental policies  to follow,  noting the policies  mean the                                                               
wells are  done and done  right. It  means that North  Dakota can                                                               
take advantage of a spike in oil prices and ramp up faster.                                                                     
MR. ROBINSON agreed it was a good point.                                                                                        
2:32:54 PM                                                                                                                    
SENATOR  BISHOP  added  a  footnote. The  North  Slope  had  some                                                               
lateral  transfers within  the oil  industry. Alaska  used to  be                                                               
known  as the  best  place to  work  since it  had  a large  wage                                                               
package but  that is no longer  true plus energy costs  and other                                                               
factors enter the equation.                                                                                                     
MR. ROBINSON  agreed the wages in  80s were high. He  said one of                                                               
the  reasons he  is bringing  up net  migration is  that it  will                                                               
affect perception for a long time.  He recalled when lived in NYC                                                               
that Central  Park was safe,  but he  was stuck in  his childhood                                                               
remembrance of it being a crime-ridden and unsafe place.                                                                        
2:34:47 PM                                                                                                                    
CHAIR REINBOLD recalled he mentioned  23,000 state jobs and asked                                                               
whether   that  included   the   university   system  and   state                                                               
MR. ROBINSON answered yes.                                                                                                      
CHAIR  REINBOLD  noted  that  the  state  operating  budget,  the                                                               
supplemental  budget and  the Mental  Health Trust  budget totals                                                               
about  $12 billion.  She pointed  out  that the  DHSS budget  [to                                                               
serve]  267,000   people  is  roughly  $2.3   billion,  which  is                                                               
ultimately  paid for  by the  private  sector through  municipal,                                                               
state,  and  federal  taxes.  She asked  what  type  of  economic                                                               
calamity will happen if the  government does not cut $1.6 billion                                                               
from the state budget.                                                                                                          
MR. ROBINSON  responded that she  raised a key question.  He said                                                               
recessions linger  when states are  going through  something that                                                               
will be permanent  and provided some examples.  He cautioned that                                                               
any  substantial funding  cut from  the state's  operating budget                                                               
will  likely be  gone for  good. As  an economist,  he hoped  the                                                               
state  would emerge  from this  downturn  with a  whole lot  more                                                               
stability  going forward.  If not,  he predicted  that the  state                                                               
would pay for some of the uncertainty-related costs.                                                                            
2:37:06 PM                                                                                                                    
CHAIR REINBOLD  offered her belief  that crime is out  of control                                                               
in Alaska  and costs  Alaskans hundreds  of millions  of dollars.                                                               
She has  seen people post  on social network sites  that "they're                                                               
outta  here." She  suggested people  are less  likely to  come to                                                               
Alaska if  it is considered  the most dangerous state  per capita                                                               
in the nation. She offered  her belief that military upsizing and                                                               
downsizing  is significant,  noting  that in  her district  about                                                               
1,000 military members  move in or out [each  year]. She recalled                                                               
research  that  extrapolated that  each  oil  and gas  job  would                                                               
contribute an equivalent of eight teacher salaries.                                                                             
MR.  ROBINSON   said  he   also  has   seen  those   studies.  He                                                               
acknowledged  that people  need to  understand what  brings money                                                               
into the  state. He  related that  in conversations  about health                                                               
care growth  he often contrasts  a new  hospital as opposed  to a                                                               
new  mine  or  a  new   military  installation.  A  new  military                                                               
installation brings  new money into  the state. A  hospital helps                                                               
Alaska's population  to be healthier  and provides  services that                                                               
Alaskans otherwise  would need to  travel to Seattle  to receive.                                                               
He referred  to it as  import substitution. He concurred  that it                                                               
was important  to keep an  eye on  the goods and  services Alaska                                                               
sells  to the  national  and  international economies,  including                                                               
oil, minerals, seafood products,  tourism, and military capacity.                                                               
He stated  that part of the  reason Alaska has the  big migration                                                               
flows is  because Alaska has a  disproportionately large military                                                               
that comes and goes more frequently.                                                                                            
CHAIR  REINBOLD  said  the military  represents  only  about  one                                                               
percent  of  the  U.S.  population  so it  did  not  seem  to  be                                                               
2:39:38 PM                                                                                                                    
SENATOR BISHOP asked whether it would  be safe to say that global                                                               
geopolitical actions  are deterring Alaska growth,  such as trade                                                               
sanctions with Russia  on Alaska seafood, the  tariffs on China's                                                               
MR.  ROBINSON  said those  types  of  things create  uncertainty,                                                               
including  the government  shutdown, and  businesses do  not like                                                               
uncertainty  so introducing  uncertainty  adds  cost and  whether                                                               
those  costs are  worth it  is a  policy question.  He reiterated                                                               
that economically speaking uncertainty brings costs.                                                                            
2:40:54 PM                                                                                                                    
CHAIR REINBOLD discussed upcoming committee announcements.                                                                      
2:41:16 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair  Reinbold adjourned  the Senate  Labor &  Commerce Standing                                                               
Committee meeting at 2:41 p.m.