Alaska sitting pretty

Posted: Thursday, November 18, 2010

The national economy has been slow in climbing out of recession, but Alaska continues to do well, an Anchorage economic expert told municipal leaders in Juneau Wednesday.

"We're in fantastic shape, fiscally," said Jeff Pantages, chief investment officer for Alaska Permanent Capital Management, an Anchorage-based money management firm.

While Pantages said the national recovery is continuing slowly, in Alaska it never got as bad as it did elsewhere and the state has a shorter distance to go in its own recovery and employment pictures.

"We never went down nearly as much as the rest of the country," he said.

Pantages was speaking at the annual meeting of the Alaska Municipal League, where local officials from around the state gather to trade ideas, learn new skills and hear from experts on policy matters.

The news they got from Pantages was remarkably upbeat, considering the state of the national economy. He said the consensus of economists was that it would take a long time for the economy to climb back.

A look at previous recessions revealed the most recent one was the worst since the Great Depression, which indicated a slow recovery, he said.

"What they're telling us, from the history books, is that they can last quite a while," he said.

The nation as a whole borrowed too much and spent too much for years, he said, fueled in part by rising stock markets and home values, he said.

"To get the crux of the matter, we lived beyond our means for quite a few years," he said.

Pantages contrasted that with Alaska, where the economy has remained relatively strong and budget surpluses have enabled the state to sock away billions in savings.

"We're in pretty good shape really," he said.

Employment in Alaska remained almost even, even as it fell dramatically elsewhere, he said.

"We never went down nearly as much as the rest of the country," he said.

One large reason for that, Pantages said, was because the housing collapse elsewhere never came to Alaska.

"We know what happened in the Lower 48, and it just didn't happen here," he said.

"We dodged a pretty big bullet," he said.

Banks in Alaska, he said, were responsible in their underwriting, and foreclosures never hit Alaska like the did elsewhere.

There are also long-term problems, the chief of which is declining oil production, he said.

Oil provides a significant number of jobs, he said, but what's more important is the revenue it brings to the state. That's helped state spending remain strong, while elsewhere budget deficits and cuts have compounded the effects of the recession.

"The amount of money that's coming from the petroleum sector is way more important than the number of jobs," Pantages said.

At the same time, he said, a hoped-for natural gas pipeline may not materialize.

And federal spending, without Sen. Ted Stevens and with rising federal deficits, may not continue like it has in the past.

Federal spending supports one third of the state's economy, he said. Oil supports another third, and the remaining third is everything else.

The state's diminished oil production has been masked by the increase in oil prices, but the industry is complaining about Alaska's Clear and Equitable Share Act, the Palin-era oil tax that raised billions for the state.

"We know that the oil and gas sector is screaming bloody murder," he said.

Those high oil prices and the ACES tax system have given Alaska big surpluses, in contrast to nearly every other state. Both the $37 billion Alaska Permanent Fund and $18 billion in other savings accounts mean the state has a cushion for the future, he said.

"We could see the price of oil go down for a number of years, and even without a natural gas pipeline, and we could still sustain today's' level of state spending," he said.

• Contact reporter Pat Forgey at 523-2250 or

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