Legislators warn triple-hit to state’s economy from COVID-19

State legislative leaders warned of a triple hit to the state’s economy as the effects of the COVID-19 impacts on industries are seen.

“This is a situation that is unfolding by the hour. It is apparent that the effects could be economically devastating,” said House Speaker Bryce Edgmon, I-Dillingham, in a Monday briefing in Juneau with other leaders of the state House.

“Tourism could be shut down, causing a huge dent in the private sector. Small businesses in Anchorage will feel the impact,” Edgmon said.

The cancellation of cruise ship voyages through mid-summer will affect coastal communities dependent on summer tourism. At the same time, the summer commercial fishing season may now be in peril, affecting those same coastal communities, if seasonal workers can’t travel to Alaska to work in harvesting and seafood processing.

Finally, the plunge in oil prices, an effect of a sharp drop in oil demand and aggressive cost-cutting by Saudi Arabia, is likely to dent a renaissance of North Slope activity now underway with the development on new discoveries.

The drop in oil prices will also hit state revenues hard although the near-term impact on the state budget is mitigated by the state’s ability to now use a portion of Permanent Fund earnings to support the budget.

However, scraping up enough money to pay even a small Permanent Fund Dividend will be challenging.

The Permanent Fund did take a big hit, however, losing $7 billion in value or over 10 percent of its value over the last week, said Rep. Ivy Spohnholz, D-Anchorage, in a Monday briefing.

In the same meeting Rep. Chuck Kopp, R-Anch., said the state has a variety of tools that could soften the impacts on workers and businesses, ranging from resources to laid-off workers made available through beefed-up unemployment compensation to low-cost capital made available through the Alaska Industrial Development and Export Authority.

Spohnholz said the state’s Unemployment Insurance Compensation fund is overcapitalized in excess of what is needed to support present unemployment claimants. There appear to be ample resources to support expansion of the program without a state appropriation.

In a late Monday press conference Gov. Mike Dunleavy said the state administration is working on an economic stimulus package, although he would not comment on details. “We’ll be rolling this out in a number of days,” the governor said.

The Legislature has acted quickly to give Dunleavy new tools to fight the COVID-19 crisis, including approval of $4 million in new state funding that will be matched with federal dollars as they become available.

The state is already hiring temporary physicians, many to be dispatched to rural communities.

The governor also credited the Legislature for passing a bill that will expand telehealth service by requiring private insurers to cover costs of telehealth, which is medical care delivered through the internet or teleconferencing, and without an in-person physical examination.

Dunleavy said he has signed the bill, and it is effective immediately.

So far there was been only one positive result in a COVID-19 test on a cargo airline pilot who was transiting Anchorage. Dunleavy credited the person with action to immediately isolate himself, although he did go to a downtown Anchorage hotel that was later identified as the Anchorage Sheraton.