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Alaskanomics Blog: Reviews and Forecasts Part 2

Posted: 19 Jan 2014 11:00 AM PST - As discussed earlier, January is busy with various presentations of the previous year and looking forward to the New Year. Commonwealth North joins the discussion by taking an in-depth look at Alaska’s assets from many different angles. The review reports on value, income, and prospects of Alaska’s key assets from the preceding fiscal year; in this case, July 1, 2012 through June 30, 2013. It also tracks performance of those assets and asset managers against pre-identified criteria and metrics.

Joe Beedle, President and CEO of Northrim Bank, hosted the discussion and gave an overview of Alaska’s economic health in 2013. The state’s total GDP grew 1.13 percent to $51.9 billion; while per capita personal income grew 2.75 percent from 2011. Both instances of growth were below the national average. Total net assets were up over 8 percent in 2013 and rose to $76 billion.

Ed Fogles, Deputy Commissioner of the Department of Natural Resources, outlined the past year for the various divisions in his department. Parks and Recreation had a solid year, holding steady from 2012. Oil and gas leases grew slightly over 2012. In 2013, 4.81 million acres of land was leased in 1,696 leases. Petroleum revenue is down, mainly due to lower production, lower oil prices, and the rising cost of production.

Joe returned to give a highlight of the state’s financial assets that include the Constitutional Budget Reserve, Division of Economic Development, Alaska Mental Health Trust Authority, Alaska Industrial Development and Export Authority, Alaska Housing Finance Corporation, Division of Treasury, Alaska Permanent Fund, and the Statutory Budget Reserve Fund. Specific details can be found in the presentation notes on Commonwealth North’s website.

Commissioner Angela Rodell, Department of Revenue, reported on the Treasury Assets. She started by describing how others looked at Alaska. We have very large financial resources that most states would love to have in their possession. The economy and finances are heavily dependent on natural resources, but we do have a great history of conservative oil price and production forecasting. Alaska does have great potential to diversify its revenue through natural gas. As noted in the BOMA presentation, Alaska has a very high median household income, while sitting middle of the pack in unemployment.

The unfunded liability of the pension funds is of great concern to the Governor and the state. At the current rate, the state will owe over $1 billion in payment in a few short years. This payment is nearly 20 percent of the total state budget. The Governor is proposing shifting $3 billion from savings to the pension fund, which will reduce the skyrocketing payments in the coming years and will result in significant savings over the life of the pension fund.

The final part of the discussion centered around the State of Alaska’s enterprises, which include the Alaska Marine Highway, Alaska Energy Authority, Alaska Railroad Corporation, International Airports, Alaska Aerospace Corporation, and the University of Alaska. With the exception of the Aerospace Corporation, all enterprises showed growth in 2013. The enterprises highlight the unique landscape in Alaska. Pat Gamble, President of the University of Alaska, shared the work of the University. The University has seen tremendous capital growth in recent years, as well as asset growth. The University is working to be a viable option for students of all ages and experience. Campuses throughout the state and distance learning opportunities are making a college education more realistic for many Alaskans. 

The luncheon concluded by outlining the importance of our natural assets in respect to the oil investment tax structure and oil exploration and petroleum projects; our financial assets of the permanent fund percentage of value, long range fiscal plan and long range capital project planning, and finally; our enterprise assets investing in our critical infrastructure through railroad, airports, and energy and reliable, affordable energy for all Alaskans.

The full presentation can be downloaded from the Commonwealth North’s website. http://www.commonwealthnorth.org/index.cfm?section=About&page=What's-New&viewpost=2&ContentId=840

Source: Alaskanomic's Blog

 

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