Legislature(2021 - 2022)DAVIS 106
04/08/2021 11:30 AM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska's Fiscal Position and Projections | |
| Presentation: Alaska's Economic and Labor Demographics | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
April 8, 2021
11:32 a.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story
Representative Mike Prax
Representative David Eastman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: ALASKA'S FISCAL POSITION AND PROJECTIONS
- HEARD
PRESENTATION: ALASKA'S ECONOMIC AND LABOR DEMOGRAPHICS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXEI PAINTER, Director
Legislative Finance Division
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Continued the presentation from 2/6/21,
titled "Alaska's Fiscal Position & Projections."
DAN ROBINSON, Research & Analysis Chief
Division of Administrative Services
Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"Alaska employment and Population Trends (and what's driving
them)," dated 4/8/21.
ACTION NARRATIVE
11:32:50 AM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 11:32 a.m. Representative Prax,
Story, Schrage, and Spohnholz were present at the call to order.
Representatives Josephson, Wool, and Eastman arrived as the
meeting was in progress.
^PRESENTATION: Alaska's Fiscal Position and Projections
PRESENTATION: Alaska's Fiscal Position and Projections
11:33:56 AM
CHAIR SPOHNHOLZ announced that the first order of business would
be a continuation of the presentation from 2/6/21 on Alaska's
fiscal position and projections by Alexei Painter, Legislative
Finance Division (LFD).
11:34:04 AM
ALEXEI PAINTER, Director, LFD, Legislative Affairs Agency (LAA),
resumed the presentation, titled "Alaska's Fiscal Position &
Projections" [hard copy included in the committee packet], on
slide 20. He reminded committee members that when they left
off, he was reviewing fiscal models based on the governor's
budget with several modifications; Unrestricted General Funds
(UGF) replaced the unusual fund sources and short-term COVID-19
funding. Slide 20 showed the impact of a 50/50 percent of
market value (POMV) Permanent Fund Dividend (PFD), with 50
percent of the draw going to government and 50 percent going to
the dividend. That resulted in a dividend of $2,400 per year
according to the static model. He noted that this fiscal model
represented the governor's idea of having a statutory dividend
in FY 22 followed by a 50/50 POMV dividend after that, which is
why the deficit in FY 22 was higher. He explained that with a
dividend of $2,400, the budget gap would be somewhere between
$1.2-$1.3 billion per year. He suggested resolving that with
spending reductions or new revenue. The governor, he said,
offered a combination of both in his 10-year plan, which
proposed several hundred million in spending reductions and
reduced spending growth rates that would narrow the budget
deficit over time. The governor also proposed "some sort of new
revenue;" however, the form of revenue was not specified. He
noted that a deficit of $1.2-$1.3 billion would nearly deplete
the Earnings Reserve Account (ERA) by FY 30.
CHAIR SPOHNHOLZ emphasized the "massive" structural gap in FY 23
of $1.3 billion in this scenario.
11:37:20 AM
MR. PAINTER advanced to the fiscal model on slide 21, which
featured a supplemental PFD payment in FY 21, a statutory PFD in
FY 22, and a 50/50 POMV PFD in FY 23 to FY 30. The supplemental
dividend payment would be an additional $1.2 billion to match
the statutory draw. This model resulted in slightly higher
deficits because the $1.2 billion was no longer in the ERA.
Further, the ERA would be completely depleted by FY 30. He
concluded that this scenario would slightly expand the annual
deficit and exhaust the state's reserves quicker in the absence
of a full fiscal plan.
CHAIR SPOHNHOLZ pointed out that by FY 29, there would be no
money left in the CBR for cash management.
11:38:37 AM
REPRESENTATIVE SCHRAGE observed that slide 21 presented a "rosy
picture" with constant returns of 6.75 percent. He presumed
that [a constant rate of 6.75 percent] was not a realistic
assumption.
MR. PAINTER replied in the affirmative. He explained that if
the state were to overdraw by this amount, the Alaska Permanent
Fund Corporation (APFC) would have to pivot to create more
available cash rather than continue its relative risky
portfolio, which brought higher returns. He noted that this
scenario assumed nothing was done to address the fiscal
problems, later adding that it showed the size of action that
would be needed to balance [the budget].
REPRESENTATIVE SCHRAGE stated that while the 50/50 split would
buy some time, additional action would be required to avoid a
"doomsday" scenario in which all available funds and revenue
sources were drained. He concluded that reduced spending or new
revenues needed to be addressed. He asked if Mr. Painter
agreed.
MR. PAINTER confirmed that additional spending reductions or new
revenue would be needed to prevent the ERA from vanishing.
CHAIR SPOHNHOLZ noted that the legislature had an existing
obligation to pay back the CBR.
11:40:37 AM
REPRESENTATIVE PRAX asked for confirmation that the revenue (in
blue] was the same on slides 19 and 20. Additionally, he sought
to verify that it was "the governor's assumed revenue but
undesignated revenue." He asked if that was correct.
MR. PAINTER said yes, all the scenarios featured the spring
revenue forecast for UGF revenue over the next decade.
CHAIR SPOHNHOLZ sought to clarify that Representative Prax had
attempted to ask whether the unspecified revenue that had been
identified in OMB's fiscal plan was included.
REPRESENTATIVE PRAX confirmed. He remarked:
I guess the difference would be you could assume
growth in the oil production ... because we've got
that stream of revenue and you can assume that it's
going up or going down, or you could assume new
sources of revenue.
REPRESENTATIVE PRAX continued by asking whether the fiscal model
assumed [existing revenue sources] or new sources of revenue.
MR. PAINTER relayed that slide 21 assumed existing revenue
sources and no new revenue; essentially, $1.3 billion of new
revenue or spending cuts would be required to balance the
budget. He reiterated that it was up to the legislature and the
governor to determine what form that new revenue would take.
CHAIR SPOHNHOLZ noted that the new revenue was unspecified in
the governor's 10-year plan. She characterized it as a
"placeholder" rather than an actual plan.
11:42:49 AM
MR. PAINTER proceeded to a "swoop graph" on slide 22, which
highlighted UGF funds going to various purposes, including
agencies and statewide/capital items. The graph provided a
picture of all the governor's proposed appropriations. The blue
bar on the far left reflected the statutory PFD plus the payment
of the past dividend for a supplemental of $1.2 billion. The
second largest item was the Department of Education and Early
Development (DEED), followed by Department of Health and Social
Services (DHSS), and so forth. Essentially, the swoop graph
depicted the components of the governor's budget from largest to
smallest [left to right].
CHAIR SPOHNHOLZ noted that the portion representing the PFD was
almost three times larger than what the state invested in UGF
for DHSS, which provided healthcare for roughly 265,000
Alaskans.
11:44:22 AM
REPRESENTATIVE PRAX said he would expect to see a reduction in
DHSS if the dividend was disbursed.
CHAIR SPOHNHOLZ asked why he would expect that.
REPRESENTATIVE PRAX replied because of "reduced need for [public
assistance]."
MR. PAINTER noted that the PFD Hold Harmless program ensured
that individuals who receive the dividend were not kicked off
public assistance for that month. He indicated that the payment
did not vary with the dividend size.
11:46:15 AM
MR. PAINTER resumed the presentation on slide 23, which showed
the impact on the ERA balance from overdrawing the Alaska
Permanent Fund by $1.2 billion in FY 21 and $2 billion FY 22, as
proposed by the governor. The blue reflected the ERA balance
following the POMV draw, the grey bars reflected the ERA balance
with the FY 21 and FY 22 overdraws, and the orange and yellow
lines reflected the impact on the POMV draw. He noted that it
would take a while for that impact to be felt. He explained
that the POMV draw had a five-year average and a lag; therefore,
the FY 22 POMV draw would be based on the balance of the funds
for FY 16 to FY 20. He continued to relay that an overdraw in
FY 21 would not impact the FY 22 POMV but would begin to have a
small impact in FY 23, which would grow over time as it was
incorporated into the average. The cumulative difference in the
POMV from FY 21 to FY 30 would be nearly $900 million.
11:48:12 AM
REPRESENTATIVE SCHRAGE asked whether the reduction in revenue
would be grow exponentially.
MR. PAINTER indicated that growth in FY 28 and beyond would be
based roughly on the rate of inflation because the difference in
the Alaska Permanent Fund balance would be equivalent, as new
earnings would be offset by a lower POMV draw. He remarked:
In inflation adjusted terms, every billion dollars you
pull out beyond the POMV draw reduces future POMV draw
by $50 million because that's ... assuming a 5 percent
inflation adjusted return. You know, in the current
forecast we have about that, but in the updated
forecast we may get in the future, we actually have
less than a real 5 percent projected return, so then
there's be a slightly smaller impact.
11:49:35 AM
REPRESENTATIVE STORY asked whether [slide 23] assumed a constant
return of 6.75 percent. She asked if [LFD would be confident]
in this scenario over the next 10 years.
MR. PAINTER said no, adding that returns were always variable.
He said 6.75 percent was the adopted forecast for APFC; however,
it was expected to go down to 6.2 percent. He explained that
there had been a large variation in returns from year-to-year
due to the volatile stock market. He offered to follow up with
additional versions using past return scenarios that would show
the ERA balance declining even more dramatically if a market
crash coincided with these overdraws.
CHAIR SPOHNHOLZ opined that the issue of volatility is an
important one because Alaska had diversified its revenue from
being solely dependent on oil. She said the Alaska Permanent
Fund was an important buffer and an additional source of
revenue; however, it, too, was volatile.
11:52:06 AM
REPRESENTATIVE WOOL observed that slide 23 only showed overdraws
in FY 21 and FY 22. He sought to verify that slide 21 depicted
a decreased POMV draw due to the continued overdraws.
MR. PAINTER confirmed. He explained that slide 21 highlighted
the impact of continued overdraws, whereas slide 23 isolated the
proposed overdraws in the current legislative session [FY 21
through FY 22] and underscored their impact.
11:53:40 AM
CHAIR SPOHNHOLZ informed committee members that more detailed
analyses could be provided by LFD upon request.
MR. PAINTER concurred, adding that a 40-slide version of the
same presentation existed if members were interested.
^PRESENTATION: Alaska's Economic and Labor Demographics
PRESENTATION: Alaska's Economic and Labor Demographics
11:54:33 AM
CHAIR SPOHNHOLZ announced that the final order of business would
be a presentation on Alaska's economic and labor demographics by
Dan Robinson, Department of Labor & Workforce Development
(DLWD).
11:54:58 AM
DAN ROBINSON, Research & Analysis Chief, Division of
Administrative Services, DLWD, introduced himself, explaining
that his primary function was to produce many of the datasets
pertaining to employment, wages, unemployment rates, and
population. He noted that that the Research and Analysis
section was policy neutral and non-partisan. Additionally, they
had produced a monthly economic publication, "Alaska Economic
Trends," which extracted insights from the data. He expressed
his hope that it was valuable to policy makers and businesses.
The goal of the publication, he said, was to make semi-
complicated economic concepts comprehendible to smart, non-
experts.
CHAIR SPOHNHOLZ said she couldn't commend the publication highly
enough. She agreed that the magazine translated complicated
concepts for a broad audience without "dumbing it down."
MR. ROBINSON noted his interest in the three charges of the
House Special Committee on Ways and Means.
11:58:41 AM
MR. ROBINSON introduced a PowerPoint presentation, titled
"Alaska employment and Population Trends (and what's driving
them)" [hard copy included in the committee packet]. He
directed attention to the graph on slide 2 showing Alaska's
long-term population history from 1946 to 2020. He highlighted
the spike in the 1970s due to the "pipeline boom." He explained
that Alaska's population was a point-in-time estimate that
accounted for individuals who lived in the state and did not
maintain a home elsewhere. He reported that the population
peaked at 741,000 in 2015 to 2016 and had since declined to
729,000. Mr. Robinson continued to discuss factors driving the
lack of population growth on slide 3. He stated that for the
first time in Alaska's history, the state experienced eight
consecutive years of negative net migration, which indicated
that more people were leaving than arriving. In total, 53,000
people had left. He noted that the 53,000 figure was not the
same as total population loss, which accounted for births and
deaths in addition to in and out migration.
12:02:19 PM
REPRESENTATIVE STORY questioned what was driving the [negative]
net migration.
MR. ROBINSON said the short answer was the trouble with [oil]
and the uncertainty surrounding the state's fiscal situation.
However, he noted that there were many other factors as well.
12:03:39 PM
MR. ROBINSON continued to the bar chart on slide 4, which
suggested that the eight years of negative net migration was
caused by fewer people coming to Alaska as opposed to more
people leaving.
12:04:27 PM
REPRESENTATIVE PRAX asked whether the same group of people were
coming and going "versus people that are staying [in Alaska] a
long time."
MR. ROBINSON reported that new arrivals were much more likely to
leave versus people that had lived in the state for a long time.
He noted that generationally, Alaska had shallower roots than
other states because of its large migration flows. He added
that the Permanent Fund Dividend provided a "rich, interesting"
data source to answer those kinds of question.
12:06:11 PM
MR. ROBINSON reviewed the average annual net migration by age on
slide 5, which showed that from 1990 to 2010 [blue line], 1,000
individuals aged 25-29 came to Alaska. Additionally, he
highlighted that the numbers were consistently positive for ages
35-39, which he attributed to families with children in school.
He continued to report that Alaska had not been a magnet for
retired people. Lastly, he pointed out that Alaska consistently
exported more of its college-aged individuals [aged 15-19] than
it brought in.
12:09:12 PM
REPRESENTATIVE SCHRAGE asked Mr. Robinson to expand on the
demographics of the age group 25-29. Also, he inquired about
additional factors that brought people to Alaska aside from the
military.
MR. ROBINSON stated that historically, employment opportunities,
such as commercial fishing and mining, [brought people to
Alaska]. In some cases, he said, they were high-wage jobs that
did not require a particularly high level of education or
training. He noted that lifestyle was another factor, later
adding that the demographic was slightly more male than female.
CHAIR SPOHNHOLZ offered her understanding that many people came
to Alaska for an adventure when they were young adults and ended
up staying.
REPRESENTATIVE SCHRAGE pondered whether people, after coming to
Alaska and accumulating wealth, moved away and spent that wealth
elsewhere.
CHAIR SPOHNHOLZ believed that Mr. Robinson could also provide
data on how long people stayed in Alaska. She shared that
people tended to retire out of state, which she characterized as
"a real problem for Alaskans."
12:12:06 PM
REPRESENTATIVE WOOL, referring to the graph on slide 5, asked
whether a line that reflected 1970 to 1990 would parallel the
red and blue lines.
MR. ROBINSON responded in the affirmative. He believed that the
25-29 point on the x-axis would be a high spike for that time
period due to the pipeline construction and the high wages of
the 1980s. He explained that Alaska had a disproportionate
percentage of baby boomers due to the migration of people in
their twenties in the 1970s and 1980s.
REPRESENTATIVE WOOL surmised that if the oil economy continued
to "flatten," a hypothetical line reflecting the future might be
slightly lower because of the direct correlation with the
economy.
MR. ROBINSON concurred; however, he advised Representative Wool
not to underestimate the lifestyle component. He addressed the
"mythology" that lured that age group [25-29] to Alaska. He
further noted that it was possible to match the Permanent Fund
data to wage records and recalled a study that looked at people
ages 25-29 who were educated in Alaska as opposed to those who
moved to Alaska. He indicated that those who moved here earned
slightly more.
12:16:00 PM
REPRESENTATIVE STORY reflected on her experience with the
governor's Teacher Retention and Retirement Work Group, as well
as the Alaska Performance Scholarship.
MR. ROBINSON recalled a prior study on teacher's salaries. At
the time, teachers had the highest starting salaries but not
nearly the highest average salaries due the poor retention
rates. Further, he addressed the Alaska Performance Scholarship
and suggested that high academic achievers would be more likely
to stay in Alaska if it were cheaper for them to study in state.
CHAIR SPOHNHOLZ recalled that the legislature had approved the
Alaska Performance Scholarship to keep more of Alaska's youth
from moving away. Further, she reported that only 20 percent of
individuals who attended college out of state returned to
Alaska. She believed that the cuts to the University of
Alaska's budget, in addition to the loss of scholarships due to
reverse sweep, caused people to move away, which she
characterized as a strategic problem from a policy-makers
standpoint.
MR. ROBINSON acknowledged that living and working in the state
clearly impacted retention.
12:21:01 PM
MR. ROBINSON addressed Alaska's long-term employment history on
slide 6, which featured a graph showing annual average wage and
salary job count. The data represented individuals who received
a paycheck from an employer; however, it excluded the military.
He noted that the decline in 2020 was due to COVID-19.
12:22:14 PM
REPRESENTATIVE WOOL sought to confirm that gig economy workers,
Uber drivers, food truck operators, and self-employed
individuals were not included.
MR. ROBINSON confirmed. He elaborated that in general, those
not covered by unemployment insurance were excluded from the
data. Additionally, commercial fishermen were excluded.
12:23:02 PM
REPRESENTATIVE PRAX inquired about the numbers on the y-axis.
MR. ROBINSON said the y-axis reflected the number of jobs (in
thousands), indicating that in 1960, for example, there were
52,000 annual average jobs. He explained that if a job existed
for 12 months, it was included in the data as one annual average
job.
12:24:07 PM
MR. ROBINSON reviewed a February 2021 article from Alaska
Economic Trends on slide 7, which focused on the pre-COVID
economy. He emphasized the importance of rejecting the notion
that a return to normal would mean "going back to everything
being fine." He referenced forthcoming data that suggested
Alaska had been underperforming compared to most states during
this pre-COVID period. He proceeded to a bar graph on slide 8
showing net migration per 1,000 people from 2014 to 2019. The
graph indicated that Alaska had lost more people per year than
any other state. He pointed out that Illinois, a state with
similar issues to Alaska, experienced the second most migration
losses.
12:26:26 PM
REPRESENTATIVE PRAX sought to verify that an individual would
have established residency for at least one year to be included
in the population; thus, seasonal workers would not be included
in the aggregate.
MR. ROBINSON answered no. He clarified that [population] was a
point-in-time estimate and that seasonal workers who lived
elsewhere during the off-season were not counted as an Alaska
resident. Further, he differentiated population count from PFD
eligibility, which required an established residency in Alaska
for a full calendar year.
12:28:07 PM
MR. ROBINSON reviewed Alaska job growth from 2014 to 2019
compared to other states on slide 9, which read as follows:
Total: -2.6 percent, 48th among states (Utah 17.6
percent; North Dakota -4.9 percent)
Private Sector: -2.5 percent, 48th among states (Utah
19.2 percent; North Dakota -6.8 percent)
State Government: -12.1 percent, last among states
(Colorado 19.2 percent; Kentucky -8.7 percent)
State University: -18.8 percent, last among states
(Colorado 19.9 percent; Kentucky -16.0 percent)
MR. ROBISON emphasized that contrary to popular belief,
attrition, as opposed to layoffs, was the primary way that job
counts changed.
CHAIR SPOHNHOLZ stated her understanding that in both the
current and previous administration, there was an intentional
strategy to reduce the harm of budget cuts by allowing "cuts" by
retirement, for example, rather than laying people off. She
asked what differentiated North Dakota from Alaska in terms of
job losses.
MR. ROBINSON said both North Dakota and Wyoming had steeper job
losses during the oil crisis; however, both states bounced back
faster. He explained that oil did not create the same secondary
impact in those states as it did in Alaska. He noted that both
states had sales tax and revenue generation capabilities;
additionally, they did not have the same level of dependence on
oil.
CHAIR SPOHNHOLZ sought to confirm that the diversification of
state revenue in North Dakota and Wyoming aided in their
resiliency.
MR. ROBINSON confirmed. He briefly discussed "the Alaska
disconnect," per the Institute of Social and Economic Research
(ISER), which found that population growth didn't generate new
revenue to the state.
12:33:21 PM
REPRESENTATIVE JOSEPHSON opined that a self-fulfilling prophecy
was occurring. He asked if that was accurate.
MR. ROBINSON acknowledged that the psychological component,
although difficult to measure, was real. He recalled that the
bond rating agency had concluded that, aside from diversifying
the state revenue stream with the POMV legislation, Alaska was
not dealing with its problems. He shared a personal anecdote
and reiterated his belief that psychology mattered in an
economy.
CHAIR SPOHNHOLZ shared her belief that if the state had passed a
comprehensive and sustainable fiscal plan, Alaska might not have
experienced the same number of significant migration losses.
She pointed out that according to slide 9, Alaska's job cuts in
both state government and the state university were higher than
the next slowest state. She asked whether that indicated that
from 2014 to 2019, Alaska had "the most negative job growth in
those two areas" in the entire country.
MR. ROBINSON replied in the affirmative. He noted that there
were two states that did not analyze the data in the same way;
therefore, Alaska was 48 out of 48, or last.
12:39:09 PM
MR. ROBINSON directed attention to a graph on slide 10
highlighting oil and gas employment from 2014 to 2020 in the
U.S. and Alaska. He noted that both patterns were similar. Oil
jobs in the U.S. were reflected in blue and oil jobs in Alaska
were shown in red.
CHAIR SPOHNHOLZ acknowledged that the pattern in Alaska oil jobs
roughly matched the pattern in the U.S.; however, she observed
that the decline in Alaska jobs appeared worse than the U.S. in
the October 2019 through April 2020 timeframe.
MR. ROBINSON agreed that the slope of decline for Alaska
appeared steeper. He speculated that projects in Alaska had a
longer time horizon; additionally, he suspected that shale could
have been a factor. Nonetheless, he cautioned against reading
too much into it, as COVID-19 was "such a massive destructive
force." He surmised that there were also extra challenges in
terms of transporting workers to the North Slope; consequently,
projects may have been halted to a higher degree compared to
smaller projects in Texas and North Dakota.
CHAIR SPOHNHOLZ suggested that in other states, the distribution
of oil was broader. Alternatively, in Alaska, oil production
largely occurred on the North Slope; therefore, one company's
decision to stop production could have had a significant impact.
MR. ROBINSON concurred.
12:42:02 PM
MR. ROBINSON addressed controlling the growth of state
government on slide 11, which featured a per-state comparison of
government jobs per 100 people. Alaska ranked third highest
following Wyoming and North Dakota.
CHAIR SPOHNHOLZ encouraged people to read the article, titled
"How Government in Alaska Compares," from the Alaska Economic
Trends October 2019 publication. The article reported that
putting aside education-related government jobs, three states
(Wyoming, North Dakota, and Alaska) had a higher concentration
of other government jobs; further, the top five states in this
category were all heavily dependent on natural resources.
12:44:46 PM
MR. ROBINSON advanced to slide 12, which related income for
state and local government workers by state. California was
ranked the highest at $80,316 for state government workers and
$70,708 for local government workers. He noted that the cost of
living in Alaska was consistently higher than other states.
Research indicated that the cost of living in Anchorage was 24
percent higher than the average city studied; Fairbanks was 28
percent higher; and Juneau was 33 percent higher. Thus, if the
ranking on slide 12 could have been "perfectly normalized" for
the cost of living, Alaska would have fallen even lower in the
rankings. He surmised that only Hawaii would have been more
expensive than Alaska.
12:46:28 PM
REPRESENTATIVE SCHRAGE acknowledged that Mr. Robinson had stated
that the results would be imperfect if adjusted for the cost of
living; nonetheless, he asked if it could be provided to
committee members.
MR. ROBINSON said he would not want to adjust this data for cost
of living because it would do more harm than good; however, he
offered to consider the request. He explained that in many
states, urban was more expensive than rural, whereas in Alaska,
it was the opposite. He supposed that he could adjust solely
Alaska's data for the cost of living.
12:47:38 PM
REPRESENTATIVE WOOL assumed that benefits were "baked" into
these numbers. He pondered whether Alaska's state employee
benefits were comparable to other states. He surmised that
benefit packages were linked to how long people stayed in
Alaska.
MR. ROBINSON clarified that this data did not include the cost
of benefits. He conveyed that he did not know how state
benefits would compare.
REPRESENTATIVE WOOL stated that the legislature regularly heard
from state agencies, such as the Department of Public Safety
(DPS) and DEED, that [workers] would receive their training in
Alaska and leave after five years due to the inadequate
benefits.
MR. ROBINSON pointed out that whether other states offered
defined benefits was relevant to teachers in particular, as that
could affect where they wanted to make their careers.
CHAIR SPOHNHOLZ noted that the House Special Committee on Ways
and Means (HW&M) would be addressing retirement and cost-saving
measures at a later date. She referenced another article from a
2020 issue of Alaska Economic Trends that ranked Alaska as the
sixth highest in the country for cost of living. She added that
Alaska was flanked by urban states that were home to high income
earners, such as New York, California, Oregon, and
Massachusetts. She urged people to consider cost of living when
thinking about wages and state spending on government employees.
MR. ROBINSON concurred.
12:52:05 PM
REPRESENTATIVE STORY recalled that [in 2020], the House
Education Standing Committee (HEDC) heard testimony from ISER
that compared teacher's salaries in Alaska to [other states].
She reported that Alaska was in the "middle of the pack." She
offered to provide the report to committee members.
12:52:46 PM
MR. ROBINSON resumed the presentation on slide 13, which
highlighted an April 2017 Alaska Economic Trends article on
state recessions. The article suggested that confidence
mattered in an economy and addressed the "near-certainty" of a
secondary shock. He said economists predicted the transition
away from oil paying for nearly all of state government. Slide
14 featured another Alaska Economic Trends article from February
2019, which underscored the economic costs of not solving the
budget issues. He pointed out that Alaska had been downgraded
10 times by the three (credit) rating agencies; further, only
three states had worse credit ratings. He noted that [the
credit agencies] wrestled with understanding the Alaska
Permanent Fund and its power. He touched on deferred
maintenance, emphasizing that some costs were ones that Alaska
did not have to incur. He acknowledged the difficulty of the
political problem and reiterated that Alaska was creating costs
by delaying the shift to a new normal.
12:56:23 PM
CHAIR SPOHNHOLZ reported that the affects of policy uncertainty
costed the state between $200-$600 million in private
investment. She agreed with the article on slide 14, which
stated that there would be pros and cons to all budget
strategies, and none would be costs-free, but until the
[legislature] made those decisions, the economy would struggle.
She referenced research that indicated that job losses in Alaska
were the worst in the nation during 2014 to 2019, which impacted
the state's population. She said Alaska was not an attractive
state to move to right now, but it used to be. She shared a
personal anecdote and asserted that until tough decisions were
made, losses would continue to occur. She concluded by thanking
Mr. Robinson for his presentation.
12:59:46 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
[1:00] p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Labor and Economic Demographics 4.8.21.pdf |
HW&M 4/8/2021 11:30:00 AM |
|
| LFD Fiscal Position and Projections 4.6.21.pdf |
HW&M 4/6/2021 11:30:00 AM HW&M 4/8/2021 11:30:00 AM |