By WIN GRUENING
The economic indicators report published last month by the Juneau Economic Development Council is a wake-up call for our community. The findings are worrisome, and should be the #1 reference in guiding the Juneau Assembly’s priorities and actions for 2024.
JEDC, a private nonprofit, receives $440,000 annually from the city to promote economic development and monitor economic data. JEDC Executive Director Brian Holst shared their latest report during a recent Juneau Chamber of Commerce presentation and outlined some alarming trends impacting our community. The report reflects changes between 2021 and 2022, some of which may have become even more pronounced in 2023.
While Juneau’s economy has generally recovered from the debilitating effects of the pandemic (thanks largely to the rebounding cruise industry), the community’s aging and declining population signal problems ahead. For the first time in Juneau’s history, residents over 60 years of age outnumber those under 20. Families moving out of Juneau coupled with low fertility rates have been the main reasons, but high housing and healthcare costs have discouraged new in-migration.
Compounding this problem is the continued loss of government jobs, once Juneau’s mainstay. The state workforce declined 2.6% year over year. Significantly, half those jobs were in administration or executive-level positions.
Plummeting student populations will soon force the Juneau School District to consider facility consolidations as state education funding is tied to school enrollment.
Most agree that making Juneau a more affordable place to live will help and encourage working families to stay or relocate here. Yet many of our Assembly’s priorities have served to do just the opposite.
These economic and demographic trends can’t be reversed anytime soon. Jacking up property taxes to untenable levels or spending more than $100 million on a new City Hall and civic center won’t make Juneau more affordable. Nor will warning the one private industry that is expanding their presence in the community that their efforts are no longer welcome. Yet the Assembly recently voted informally “thumbs down” as a signal they want the cruise industry to shrink.
This begs the question, what exactly will be the plan to replace the revenue losses when visitors are reduced? It was only a few years ago that the Assembly discussed exempting food from sales taxes and, despite almost unanimous support, they were unable to deliver a plan to replace the $6 million hole it would have created in the budget.
The 2023 cruise season generated over $34 million in sales tax and passenger fee revenue. Reducing it by just one ship per day would create a similar-sized hole in the municipal budget. And that doesn’t take into account other economic impacts related to employment and cruise line purchases.
Except for mining there’s no other realistic option to sustain our economy save the cruise industry. We can hope for more independent visitors or Coast Guard cutters, but other options are speculative and long-term. None come close to replacing the kind of employment and revenue now provided by the cruise industry.
Instead of demonizing the cruise industry, why not collaborate productively with them to expand opportunities for employment and revenue growth?
One such example is Huna Totem Corp.’s Aak’w Landing dock project. So far the city seems more interested in allocating an estimated $80 million in tax revenue to purchase Juneau’s private docks than approving this project, one that could pump an estimated $150 million in private investment into our community.
Juneau’s Tourism Management Best Practices (TMBP) program has been widely lauded and copied in other Southeast Alaska communities. Despite assertions 20 years ago that further tourism growth in Juneau was unsustainable, impacts as evidenced by resident complaints have been largely alleviated. The recent increase due to the uptick in passenger volume was not unexpected and is being addressed.
More importantly, the recommendations of the Visitor Industry Task Force are just now being implemented to include a five-ship daily limit and other congestion mitigation measures. It’s premature to consider other changes until those actions can take effect.
In the meantime, our Assembly can and should concentrate its efforts on how to grow the economy, streamline the budget to reduce taxes, and reverse Juneau’s demographic decline.
After retiring as the senior vice president in charge of business banking for Key Bank in Alaska, Win Gruening became a regular opinion page columnist for the Juneau Empire. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is involved in various local and statewide organizations.