Dunleavy vetoes would eliminate 4,200 jobs in a hurry, economists say

Gov. Mike Dunleavy has failed to offer an analysis of his budget plan, for obvious reasons.

An independent review of Dunleavy’s vetoes says to expect the elimination of about 4,200 Alaska jobs in the short term. But the losses could be a lot worse over the long term and it will take years to see the full impact, according to a new study by two Alaska economists.

A majority of legislators oppose the vetoes, but it takes a three-quarter vote to override and it may not happen during the special session that begins Monday.

“While the short term losses represented a considerable shock to the economy, the consequences of these cuts on long term development could be even more pronounced,” wrote Mouhcine Guettabi and Nolan Klouda of the University of Alaska Anchorage.

About half of the job losses would be from the 40 percent cut in state funding for the university. The total $83 million Medicaid cut and the $20 million Senior Benefits cut would eliminate about 1,000 jobs.

Guettabi and Klouda said the university cuts will “harm the ability of employers to hire skilled graduates which will in turn harm Alaska’s economic prospects.”

They estimate that 1,300 jobs would be lost directly through the University of Alaska cuts, while 700 additional jobs will be lost as a consequence of the UA cuts.

Here are some key findings:

  • They said more old people may move Outside because of the loss of reductions in state assistance, including Medicaid, which could lead to a drop in health care jobs.

  • Declining prospects for growth in jobs related to technology if the university is forced to make cutbacks in engineering and computer science.

  • A decline in the property tax base if the real estate market declines.

  • The impacts could grow as university faculty take grants with them to other institutions.

  • Decreases in Medicaid reimbursements would lead to higher health care costs.

Dermot Cole7 Comments