Alaska 2010 outlook: new decade brings challenges, opportunities.

• Author: Harrington, Susan
• Position: ECONOMICS: SPECIAL SECTION

Recession, recovery, rehab: the three R's of prevailing economics. Recovery, not recession, is the buzz word for 2010, but rehab could turn out to be the key. A new decade begins with government subsidies increasing GDP and decreasing unemployment, thus elevating the economy to recovery status.

All the careful confidence cannot keep the economy up when the handouts end. Billions of dollars later, credit is still tight and people are keeping their money in their pockets. The economy will not grow without increases in private spending and lending, two details necessary for lasting job creation. In Alaska, it's a bit of a different story.

Read on to find out what some remarkable leaders have to say about Alaska's economic outlook for 2010. A golden thread of optimism and hope for stability runs through most sectors of the economy. ConocoPhillips Alaska President-Jim Bowles gives an honest appraisal of what the State needs to do before the economy can move forward.

We've included comments from government representatives as well. Gov. Sean Parnell weighs in on the State's commitment to Alaskans. Other State voices include Labor Department Commissioner Click Bishop and Transportation Department deputy secretaries of aviation, marine and surface transportation. On the federal side, U.S. Army Corps of Engineers Alaska District Commander Col. Reinhard Koenig briefs us on planned 2010 military construction spending.

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BY SEAN PARNELL

Governor

State of Alaska

ALASKA

In the past 50 years, Alaska has been generous to her people, offering many opportunities for success and happiness. Alaska still has much to offer and I believe her best years are yet to come. My number one priority is to position Alaska's economy for growth and our children and families for opportunity. You can be assured that no matter the issue--increasing oil production, making a gas pipeline happen, fixing our roads or bridges, or supporting our families and children--I'll be working hard with your help for Alaska.

So what's working? Clearly oil and gas exploration and development works--and fuels our economy. But TAPS throughput is declining. As we continue our quest for renewable resources, our job is to keep the oil flowing through TAPS. Take Alaska's outer continental shelf (OCS) for instance. The potential is huge. We're estimating 35,000 direct and indirect jobs and a $72 billion payroll.

We are also making progress on the natural gas pipeline. Today, we have four major international companies working on commercializing Alaska's North Slope gas--whereas, just two years ago, we were at a standstill. For the first time in 32 years, we have an open season scheduled for North Slope gas.

Work also continues on in-state gas, which is particularly important to the Interior and to Southcentral. Our instate gas pipeline team has identified and is evaluating all options for in-state gas. Considerable work has been done evaluating a stand-alone pipeline from both the North Slope and the foothills of the Brooks Range to Fairbanks and Southcentral, and a spur line to Southcentral from a major pipeline to the Lower 48.

Another focus of my administration is infrastructure--we are going to fix what we have got and put our contractors to work. First we'll focus on Alaska's sole ground transportation link to the oil and gas fields of the North Slope--the Dalton Highway. We will continue improving the safety and drive-ability of the Dalton by taking steps to bring it up to current construction standards. This project supports both our existing oil production and future gasline efforts.

The capital budget will include $100 million for deferred-maintenance projects. This will be the first year of a five-year deferred-maintenance plan to maintain the State's assets. The construction industry can depend on these "hammer-ready" jobs each and every year for the next five years.

Work force development and job training also are key to Alaska's economic future. I've included $3.5 million in my budget for Alaska construction academies, $2 million for the pipeline training facility in Fairbanks, and funding for job-training efforts in rural Alaska. I have also introduced the Governor's Performance Scholarship program, or GPS. This is a merit-based scholarship for Alaska high school students, which will allow them to earn scholarships for postsecondary studies at qualifying Alaska universities or job-training centers.

We will work to grow our economy through the ingenuity and creativity of our people. As we look to our future--to Alaska's next 50 years and beyond --we will work together to promote and support responsible development of Alaska's resources. Only then can we be sure that Alaska's next 50 years will be her best yet.

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BY JOHN MACKINNON

Executive Director

Associated General Contractors of Alaska

CONSTRUCTION

Construction is the third largest industry in the state and accounts for 20 percent of Alaska's economy. The 2010 outlook for commercial construction is fairly good for roads, bridges and airports, less so for buildings.

Normal federal funds to Alaska each year are between $270 million and $280 million for highways and $180 million for airports. We have a $315 million bond issue passed in 2008 funding projects statewide and accounting for at least two solid years of work that will soon go out to bid. The stimulus (ARRA) money funded about $250 million for highways, bridges and airports for 2009 and 2010--three-quarters of those projects are yet to hit the streets.

On the building side, we're seeing the first real downturn in 20 years. There is some pull back of private investment, some nationwide stores are delaying construction; and in housing, new construction in 2009 was one-third what it was in 2007--$250 million versus $750 million. Overall, building construction was down 10 percent in 2009 and expected to be down more in 2010. Stimulus money is funding hospitals in Nome and Barrow and a health care facility in Anchorage. In Anchorage, we could see a negative effect with passage of Title 21, which could increase the cost of commercial development 10 percent. Increasing regulations is best done when the economy is booming --it's not the best time now when the economy is down.

Gov. Parnell's proposed deferred-maintenance program could be a real boost to construction spending and a real benefit to state facilities. Construction bidding is very competitive, much more than in many years, with many bidders on each project and prices well below estimates. It's a great opportunity for the State to take advantage of the good market to tackle the backlog of deferred maintenance. Taking advantage of that is good business. Next, we could start that big list of infrastructure projects for the gas pipeline--$500 million to $700 million worth of work that will take eight to 10 years to do. It's time to start.

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BY COL. REINHARD (RHINO) KOENIG

Commander

U.S. Army Corps of Engineers, Alaska District

CONSTRUCTION (MILITARY)

The U.S. Army Corps of Engineers, Alaska District's strong military construction mission provides a stabilizing force to the state of Alaska's economy in times like these when private construction remains uncertain. The Alaska District, serving as the Military Construction (MILCON) construction agent for the U.S. Army and Air Force in Alaska, manages one of the largest military construction programs in the nation. The fiscal year 2010 program estimate is $314.6 million, up from last year's $297.6 million. Continuing to support transformation of the Army, military readiness, training and quality-of-life facilities to support a nation at war, the District anticipates that the fiscal year 2011 program will remain strong at $351.9 million.

The fiscal year 2010 program includes 11 projects in the Army Program, valued at $252.7 million and three projects in the Air Force Program, estimated at $61.9 million. Most projects are scheduled for award this month and next, after Congress passes the military appropriations bill. The district advertises for proposals to design and build these projects on the Web site https://fbo.gov

In addition, the Alaska District is awarding 48 projects for the Army and the Air Force under the American Recovery and Reinvestment Act (ARRA) of 2009. Funded at $21.8 million, these are repair, renovation and small construction projects. Two projects at Eielson Air Force Base have been awarded for a total of $256,000. Still to be awarded are two projects at Fort Wainwright estimated at $3.45 million. Army ARRA projects at Fort Richardson total $18 million, including 23 already awarded and 21 to be awarded.

The Corps of Engineer's motto "Building Strong" and the Alaska District's motto of "Building and Preserving Alaska's Future" supports the Army's motto of "Army Strong" and symbolizes our commitment to construct world-class facilities on-time and within budget, while helping provide economic stability to the Last Frontier.

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BY KIM KOVOL

Executive Director

Green Star

ENVIRONMENTAL

Many industries are addressing their mission, HR and operational practices to include "green" policies in order to be attentive to their employees' values and remain competitive in business with client demands. Wal-Mart, for example, will soon be providing their vendors' "carbon footprint" so customers are better educated and can make more informed decisions with their purchases.

In 2010, more companies will be "greening" their businesses through employee interviews, evaluations and performance reviews. Hiring decisions will increasingly be made after measuring prospective employees' commitment to "saving green" (your bottom line!) by "living green" through their practices, ideas and philosophy.

More performance measures will include environmental stewardship, learning opportunities and training, paper use, supply orders and other "green" practices, such as using...