Creating a diversified Valley economy is a team effort

Sept. 27, 2005

Spectrum\Bill Allen

The Mat-Su Borough has been in a period of sustained population growth for several years. The influx of new people has brought many good things to our community, including new homes and the related construction jobs. New businesses, many in support of the residential growth, are also being created. We should welcome and support these signs of positive economic activity. We have done well to encourage positive development, but we can do much, much better.

Today's growth is unbalanced. It leans too heavily on the residential sector, we have placed too many eggs in one basket. There are many reasons why we must diversify our economy. I'll mention just a few and then suggest how we can create a more diversified economy that supplies good-paying jobs, improves funding stability for our schools and reduces the tax burden on residential tax payers.

The residential development boom brings jobs and residents to the borough, creating a positive atmosphere of growth. An external shock, such as a change in interest rates, could severely hamper the growth trend and trigger an economic bust. We can all remember the mid-1980s, when real estate prices dropped and our economy crashed. It took more than 10 years for market values to recover to mid-1980s values. People left the community in droves, foreclosures skyrocketed. We must learn from that experience and not let it happen again.

Our lack of economic diversity causes other problems, too. Look at education funding. If a family with two school-age children moves into our community, the cost of educating the children exceeds the tax revenues raised by their home's tax assessment. The assembly is forced to make up the difference by raising the mill levies, this challenge is compounded by our relatively small commercial sector. How will we finance infrastructure needs? The residential boom burdens the current road systems and schools, creating the need for construction and increased maintenance. How will these necessities be funded? Today the answer comes in the form of ever-increasing mill levies, now capped by formula. Within that challenging climate we must fund a way to pay for growth while also encouraging economic expansion and job creation.

The answer is diversification of the private-sector economic base. We must emphasize the expansion of our commercial and industrial sectors. We are off to a good start at Port MacKenzie, with NPI shipping wood chips and Veco building oil-field modules, but we must do much more. It is critical that we support and encourage these individuals by providing them with adequate access to timber resources and improving our roads. The assembly should consider creating a port authority with the mission of promoting economic development, fostering cooperative partnerships with private sectors and operating a self-sustaining port in accordance with sound business practices. Port Mac should be an enterprise governed by a board of directors, not by the borough assembly. It should be profit driven and should never become a political tool. This project is a major step forward in meeting our mission of economic diversification and reducing the tax burden for homeowners.

We have a new hospital and new health-related jobs. Now we need to ensure our residents can qualify to fill those jobs. We must expand our two-year college to a four-year institution that offers training and degrees in health sciences. Efforts are now being made to consider the use of the current Valley Hospital facility as a statewide health-care training center and student dormitory. If this concept develops as envisioned, the center could offer courses required to support a total health-care operation. This endeavor would create several full-time employment opportunities, create a labor pool for the Mat-Su Regional Health Center and meet its primary purpose of training Alaskans to fill critical health-care positions. Our already strong tourism base could be greatly improved by adding destinations at Hatcher Pass and South Denali.

Here are just a few things we can do to diversify our economy. We begin by working together and establishing our economic goals and identifying how we will achieve these goals through an implementation strategy. It does no good to say, "We're open for business" and then rudely kick out the first firm we don't think is right for us. Even worse is inviting potential investors to spend funds on feasibility studies, business plans and exploration only to find that the borough is not interested in having their business located here. One way we send these mixed signals is when the governing body passes unacceptable legislation, making it difficult to operate a business in our community. As we establish policies on economic development, let's be sure to establish fair rules of the game simultaneously.

To move the process forward, the assembly created a new position to work solely on economic development. I intend to introduce to the assembly a resolution to establish a council on economic policy. The council will be comprised of representatives from the business, tourism, finance, agriculture, labor, education and resource communities, with general public and state government representation as well. The council will provide the forum for us to cooperate and agree on common goals and policies; identify those industries, such as health care, upon which we should focus to achieve economic diversity; establish policies that encourage a positive climate for private sector development, and tackle the tasks of encouraging value-added development of our natural resources, eliminating unnecessary constraints while upholding sound environmental and community protections.

The benefits of economic diversification are many. I'll mention a few. The expansion of the private-sector economic base creates permanent, well-paying jobs and also reduces the number of commuters. A diversified economy allows for a more equitable and affordable tax system, one that is not overly reliant on residential real estate levies.

With a diversified economy, it will be easier to adequately support our educational system, build needed roads and provide basic services, like emergency response. All we need to do is recognize the problem, work together and get going with the solutions. Please join me in this challenge. I look forward to working with you to create a diversified, robust economy in our community that is second to none. Let's get beyond talk.

Bill Allen is a Mat-Su Borough Assembly member and the state director for USDA Rural Development.