WC can report that the Alaska Legislature has accomplished something: it has put the State of Alaska in an economic recession.
That’s right, it’s official. Moody’s Analytics, a well-regarded economics consulting services, reports:
The failure of energy prices to rebound has pushed Alaska into recession. Job growth is among the slowest in the nation, on par with that in other energy-dependent states such as North Dakota and West Virginia. Mining and energy-related firms have been steadily cutting workers over the past year, and lower state severance tax revenues are pressuring Alaska’s ailing public sector. Secondary industries such as business/profes- sional services that rely on energy are suffering as well. The jobless rate, at 6.4%, is more than 1 percentage point above the U.S. average even though the labor force is at a five-year low.
And, remember, the Alaska Legislature proposes to cut spending to solve the problem. Cutting state spending will necessarily mean more job losses, in sectors of the economy where the economic multipliers are much higher than oil and gas. So, thanks to our friends in the majority caucus of the state house and senate, we can all look forward to a deeper, more serious recession. Isn’t that special?
As the fools in the House and Senate burn through our cash reserves in the Constitutional Budget Reserve, they reduce the options for solving the crisis. Which means it will be that much harder to climb out of the fiscal hole those folks are digging for us.
This didn’t have to happen. WC isn’t the only person who cautioned that it would be very easy for the Alaska Legislature to take a fiscal crisis and make it an economic crisis. But now it is.
It’s not too late to mitigate things. The Legislature could start by adopting Governor Walker’s budget proposal, which strikes a pretty good balance and charts a pretty clear path. If the Republican Majority coalition in the state legislature rejects Governor Walker’s ideas because they came from an apostate, a Republican who ran as an independent against the incumbent Republican, they are placing their political bitterness ahead of both the state’s economic health and the will of the people. And that is utterly wrong.
Or the Legislature could remember the rule about getting out of holes: when you find yourself in a deep hole, the first thing to do is to stop digging. The Legislature’s slash and burn tactics are just digging a deeper hole. Slash and burn the state economy a little more and you might put the state in a full scale depression. Won’t that be fun?