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How Are We Doing? Monitoring Alaska's Fiscal Condition
Scott Goldsmith
Alaska’s government has been down on its luck this year, with low oil prices, a big deficit, and legal disputes over the budget. Despite all that, Alaska still has substantial assets. The state’s share of Alaska oil reserves is worth—even at low oil prices—about $16 billion. The Permanent Fund has a balance of $13 billion and earned $1 billion last year. Pages 2 and 3 of this summary examine what is happening to the state’s assets—and why preserving and building them is so important. The foldout details the risks of relying exclusively on cash reserves. Page 4 provides a simple checklist for monitoring the state’s progress toward the long-term budget strategy called the Safe Landing.
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Implications of Oil Supply Uncertainty on a Small Oil-Producing Regional Economy
Scott Goldsmith
The state of Alaska has an economic and fiscal structure that is unique among the states. The petroleum industry, including exploration and development, production, transportation, and refining, accounts for nearly half of gross state product (the state equivalent of gross domestic product). In theory it is a simple matter to devise a rule that has the dual effects of neutralizing cycles in economic activity associated with the life cycle of petroleum exploitation and maximizing the benefits to residents from the expenditure of the petroleum wealth. Of the many complicating factors that make it difficult to devise and apply such a rule is the uncertainty regarding the size of the endowment, which is also one of the most interesting. How much it is appropriate to spend today depends directly on the size of the endowment not yet collected. This paper reviews a model for answering the public policy question of when to spend, with a special focus on how uncertainty complicates the debate. It also looks at the process of developing a plan for implementing the model within the context of the Alaska political and fiscal structure. Presented at the Second OPEC/Alaska Energy Conference in Anchorage, Alaska on May 7, 1994.
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Review of the Alaska Health Facility Input Price Index
Scott Goldsmith
The purpose of the Alaska Health Facility Input Price Index (AHFIPI) is to describe and estimate the cost inflation in hospital and nursing home services in Alaska. If the Alaska economy is expected to grow more slowly than the US economy it does not seem reasonable for the Alaska Health Facilities Input Price Index to forecast higher inflation than for the US for the years 1994 through 1997. Since the other proxy variables in the index are regional or national, the faster rate of inflation for the Alaska index is entirely attributable to the higher predicted AHE inflation rate. Other evidence suggests that the trend in Alaska costs is to increase more slowly that the national average and that this projection of more rapid inflation is inconsistent with that historical evidence. These data sources suggest that overall prices, Alaska health costs, and wagerates in general are rising less rapidly than the US average and that these trends will continue unless some can be identified which would reverse them.
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Testimony on SJR 38 "The Cremo Plan"
Scott Goldsmith
This document was submitted as testimony to the Alaska Senate State Affairs Committee by Professor Scott Goldsmith on January 28, 1994. The Cremo proposal would establish, by constitutional amendment, a system under which all natural resource revenues would be deposited into the Alaska Permanent Fund and each year a fixed percentage of the fund assets, equal to the long run average real return on the Fund would be withdrawn for appropriation by the legislature. Based upon the analysis provided by Mr. Cremo, the amount available for appropriation (income budget) would be $3.079 billion in 1996, the first year of the transition phase, and $2.860 billion in 2005, the last year of the transition phase. In evaluating this plan the potential risks and costs should be identified and the plan should be compared to alternative methods of addressing the problems targeted in the plan. In this testimony, the potential problems and alternative policies are discussed, particularly specific problems associated with dependence on oil revenues.
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Alaska's Gross State Product, 1961-1993
Scott Goldsmith, Teresa Hull, and Alexandra Hill
Gross state product for Alaska is the sum of the value added in Alaska in the production of all the goods and services produced in a year. It is Alaska's contribution to the US gross domestic product. Gross product for an industry is its value added calculated as the market value of output minus the cost of purchased goods and services used in production. For example, the gross product in the Pulp and Paper Manufacturing sector is the market value of pulp produced minus the cost of purchased logs and other inputs such as petroleum and legal services. Value added in timber harvesting, petroleum wholesaling, business services, and other activities providing inputs to pulp manufacturing is separately calculated if produced within the state. If these inputs are imported from another state, they are excluded from the calculation. Tills method captures the value added contributed by each industry and avoids double counting. Tabulated data follows our description of gross state product for Alaska.
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The Role of Natural-Gas Vehicles in Energy Policy - A Status Report
David B. Hatcher and Arlon Tussing
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When Values Conflict: Political Accommodation of Alaska Native Subsistence
Marybeth Holleman and Thomas Morehouse
Management of subsistence hunting and fishing in Alaska today is caught between federal law and the Alaska constitution. The federal Alaska National Interest Lands Conservation Act of 1980 (ANILCA) requires giving Natives and other rural residents subsistence preference-that is, first call on fish and game when they are scarce. But the Alaska Supreme Court~ McDowell decision in 1989 held that a similar state law was unconstitutional, because the state's constitution prohibits granting such preferences based solely on place of residence. As a result, the federal government now manages subsistence on federal lands, the state on state lands, and it appears to some that the two management systems are headed toward an inevitable "horrific collision." This paper argues that although the fundamental value conflict between equal rights and cultural survival cannot be resolved, it can be circumvented and at least partially neutralized. Legislators, judges, and administrators can focus on material or economic problems of resource conservation and allocation, which, unlike value conflicts, are more susceptible to compromise.
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Alaska Fisheries and Regional Economics
Dan Hull and Scott Goldsmith
This report provides profiles for several commercial fisheries and the regional markets in which they are sold within Alaska. Information on five broad fisheries includes harvest, stocks, season, managment, price, ex vessel value, processing, market, market conditions, 'general', and market outlook. Regional markets included here are Duch Harbor/Unalaska, Kodiak, Bristol Bay (Dillingham annd Naknek), Prince William Sound, Kuskokwim/Bethel, Norton Sound, and Southeast Alaska.
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Comparison of Salmon Prices in Alaska and Canada
Gunnar Knapp
Prices for Alaska salmon have declined substantially over the past four years due to lost market share. In most cases market share has been lost to increased farmed salmon production which has market advantage due to year around availability, consistent high quality and consistent pricing. While Canadian wild salmon has also suffered price declines, they have not been as severe as Alaska. Average Canadian ex-vessel and wholesale prices for sockeye and pink salmon are significantly higher than Alaska salmon prices.This report explores the extent of and reasons for price differences between Canadian and Alaska salmon pricing. By identifying the reasons for higher prices paid for Canadian salmon, it is hoped the state and the industry can better identify development policies and market strategies that will increase the value of Alaska salmon.
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Class Size Reduction Project - First Year and Final Report
N/A N/A
These reports present the first year evaluation and final assessment of the Elementary School Class Size Reduction Pilot Project at four participating elementary schools: one in the Juneau School District and three in the Kenai Peninsula School District. The project was designed to assess the effectiveness of reduced class size combined with other teaching interventions on student achievement and attitude, school discipline, and parental involvement in education. Participating schools explored strategies to reduce class size and improve education without significantly adding to the cost of education. They include descriptions of participating schools' progress toward achieving their goals and comparative data on students' academic achievement from Fall 1993 to Spring 1996. The final report also answers a series of research questions pertaining to the effectiveness of the Elementary School Class Size Reduction Pilot Project and includes a summary of the cost per classroom for reducing the pupil teacher ratio and implementing the instructional changes.
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Evaluation of the Mat-Su Jobs Teen Parent Demonstration Project
Greg Protasell, Elizabeth Talbot, Carol Gibson, and Diane LaRusso
Alaska has seen a significant rise in AFDC enrollments since the late 1980's. While most states had some increase in participation, Alaska's 35.6% increase from 1989 to 1991 was eighth largest in the nation. This report was prepared by the Institute of Social and Economic Research at the University of Alaska Anchorage, commissioned by the State of Alaska Department of Health and Social Services (HSS). It is a process evaluation of the Mat-Su School District Teen Parent Demonstration Project, (JOBS Demonstration Grant 92-5-TP-AK-022). The evaluation study is organized under two major sections. The first section describes the context and design of the Teen Parent Demonstration Project. We examined the stated goals of the program and interviewed key persons involved in the project to learn about their perceptions of the program's goals and processes. The second phase of the evaluation focused on the procedures and organizational arrangements created by the demonstration project to deliver services to the teen parents. Our main goal was to examine the processes, rather than the impacts of the demonstration project. In other words, this evaluation did not attempt to measure outcomes of the project, rather it monitored program activities in order to document client participation levels.
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Gaining and Losing Under State Fiscal Policies
Matthew Berman and Alexandra Hill
Sometime soon—just when is uncertain—Alaska’s legislators will run short of money to balance the state budget and will have to make big budget adjustments. Those budget adjustments will be especially difficult, because the generous fiscal policies of the 1980s have had major effects on the jobs and incomes of individual Alaskans. The dividend and bonus programs are reflections of Alaska’s oil wealth at the start of the 1980s—and examples of the many ways the legislature used oil money to make life sweeter for Alaskans. It established the Permanent Fund Dividend program to make annual payments to all residents. It expanded the Longevity Bonus program of monthly payments to older Alaskans. It abolished the personal income tax. It increased aid to local governments, allowing them to cut property taxes while they hired more workers and increased services. And it established loan programs and increased spending for services and facilities, spreading jobs and money throughout the economy. The problem is that the state’s oil revenues for the rest of the 1990s are likely to be smaller on average than they were during the past five years, and much smaller than a decade ago. This paper estimates the effects of selected state policies on different types of households and communities in the 1980s, and assesses the likely consequences of specific policy changes
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Measured Energy Savings from the Alaska Low-Income Weatherization Assistance Program
Linda Brooks, Marybeth Holleman, and Steve Colt
The Alaska Housing Finance Corporation (AHFC) asked the Institute of Social and Economic Research (ISER) to conduct a evaluation of the actual energy savings achieved by the Low-Income Weatherization Assistance Program. This effort represents one of the first formal attempts to quantify savings from weatherization programs in Alaska on a large scale. This study was limited by design to houses heated piped natural gas. We have divided our study into two phases. In Phase One, we used the PRISM software system to measure overall savings for a group of homes. In PhaseTwo, we plan to explore the effectiveness of particular weatherization measures and other sources of energy saving such as behavioral changes, new occupants, and physical changes to the housing unit. This report presents preliminary results of the Phase One PRISM analysis.
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ANCSA and Rural Alaska: An Economic Reality Check
Steve Colt
This presentation uses economic and energy data to outline five myths related to the benefit delivered by ANCSA for Alaska Native people. It includes both textual and graphical data. Presented to Commonwealth North.
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Economic Analysis of the Potential Sale of the Thorne Bay Electric Utility
Steve Colt
This report was prepared as an analysis of different options for the potential sale of the Thorne Bay Electric Utility. It addresses costs of service, rates, fiscal impact on the City of Thorne Bay, financial effect on the residents, future costs and a number of other important factors for evaluating the economic implications of such a sale.
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Estimated Costs to Alaskans of the Proposed 1993 BTU Energy Tax
Steve Colt
The BTU tax proposed by the Clinton administration in March 1993 levied an excise tax on all forms of energy at the rate of 25. 7 cents per million Btus of heat content. In addition, a surcharge of 34.2 cents per million Btus was to be added for all petroleum-based fuels. The National Association of State Energy Officials (NASEO) developed a worksheet for estimating direct and indirect Btu taxes to households. We used this methodology to estimate overall taxes that would be paid by Alaskans. We made one adjustment to the NASEO methodology by removing the direct consumption of coal by the military from the analysis. Under the adjusted NASEO methodology, the average Alaskan household would pay a total of $154 per year in direct taxes for energy consumed by the household, plus about $251 in indirect taxes, mostly in the form of higher prices for goods and services which use energy in their production. These calculations assign all of the costs of the Btu tax to United States households. Therefore, there is no additional tax burden which falls separately on "business," and in reality some of the tax burden would fall on foreigners.
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