If governor prevails on budget, huge adverse impacts

If governor prevails on budget, huge adverse impacts

Gov. Mike Dunleavy’s proposed FY 2020 state budget would have severe effects on the state’s economy and in particular on municipal governments due to the shifting of costs from the state to local governments. The University of Alaska Anchorage’s Institute of Social and Economic Research has estimated that the aggregate effects of the government reductions in state, local and federal funds would approximate 16,924 jobs to be lost. This would be partly offset by estimated jobs gained from a “fully-funded” Permanent Fund Dividend, meaning a $3,000 PFD, the governor has promised. ISER puts the job-creation effect of the PFD at 5,047. The net jobs lost, or 16,924 minus 5,047, is 11,877.
An unknown in this is the real quality of the PFD jobs created. ISER’s work indicates that the jobs may be more in retail and more temporary in nature. Also, the PFD estimate is uncertain to begin with. Other economic assessments including one by the state Dept. of Labor and Workforce Development have not been able to document job-creation effects of the PFD, for example by examining employment data in years of unusually large dividends. No impacts were seen in the data.
The fully-funded PFD would have the effect of adding $696.1 million to the economy, but econo- mists have no idea of how much of this “leaks” out of state (spent on vacations, for example) or how much of it fails to enter the economy, usually because it is saved.

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