My turn: Juneau should prepare for possible economic avalanche

Posted: Sunday, December 14, 2008

Recent actions by the city to hire an avalanche expert should hopefully be a good prognosticator that the city will take a sharper look at next year's borough budget. Several economic warning signs are in place: drops in this year's student enrollment, loss of Juneau population in general, prediction of sizable loss of sales tax revenue, potential falling property assessments, "de facto" center of state government in the Anchorage area, shortened legislative session, uncertain tourism season and a Juneau construction "pipeline" that could run out of jobs shortly.

Construction projects in the private and public sectors have helped buoy Juneau's economy. Private development such as downtown tourism buildings and infrastructure, remodels of Fred Meyer and Wal-Mart and construction of Home Depot have been accomplished. Private construction of new residential housing is expected to flatline or decline in Juneau.

Several major public projects are completed or near completion: the National Oceanic and Atmospheric Administration facility, Thunder Mountain High School, Bartlett Regional Hospital and the overpass project on Egan. Signs of work on some of the public projects left in the construction pipeline are: Harborview Elementary School, the old NOAA facility and Masonic Temple remodels, construction of the second parking garage and the city Public Works facility. Joining them soon will be the airport remodel and construction of the aquatic center.

Many of these projects will reach completion in or shortly after next year's budget cycle. After that, we will be back to basically street improvement and water and sewer projects. Construction money and jobs will shrink dramatically.

Positive economic factors - the capital, road and Kensington - all factor into the budget. The capital, the economic cornerstone for Juneau, seems more secure. State representatives are well positioned: Cathy Muñoz in the state House majority caucus, Beth Kerttula as House minority leader and Kim Elton as part of the majority coalition in the Senate.

A move-the-capital bill should be extremely difficult to get through the Legislature. The recent dramatic drop in the price per barrel of oil and the subsequent loss of state revenue also lessens the move possibility. Barring an initiative process or an unexpected surge in oil price, the city "rainy day" fund should not have to be accessed for a capital-move fight.

At the recent governor's meeting with President-elect Barack Obama, a part of the discussion centered on immediately putting upward of $136 billion into infrastructure projects that are "ready to go," such as roads and bridges. Juneau road access definitely has been in the "ready to go" status. The Juneau road access project alone could funnel hundreds of jobs back into the Juneau construction pipeline and dramatically lower transportation costs.

The fate of several hundred Juneau jobs also hangs in the balance in a pending U.S. Supreme Court decision on whether Kensington's tailing impoundment plan met environmental requirements. If the court decides it had, several hundred jobs could be added to the community if Coeur Alaska decides to move forward with the project that is 90 percent complete in construction. Kensington could become the second largest private employer in terms of payroll at production and contribute approximately $1.5 million annually in city property taxes and $450,000 in direct sales tax payments.

An economic avalanche is not rolling down our mountainsides yet, but the city needs to factor how to mitigate or to stop one. It will not be easy.

Social needs rise exponentially during times of economic downturns. We have an exceptional group of public employees serving the city. They, too, need to be supported.

The Juneau Assembly should spend more time at the beginning of the budget process getting the best economic forecasting and then request a budget prepared that reflects the forecast they believe is the most realistic and will protect its citizens.

In the meantime, the Assembly and mayor, its staff and its lobbyists need to be more vocal in its support of Juneau road access and the Kensington Mine, which the Assembly has long been on public record in supporting. Implementing either or both of these projects will go a long way to mitigating some of the negative factors the city could have to deal with in the near future.

• Ken Koelsch is a former Assembly member and deputy mayor of Juneau.

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