 Governor Says S&P Rating a Positive Indicator of Alaska Economy Health August 22, 2002
"At a time when other states are facing major economic slumps because of falling revenues, this stable report is a positive indication of the good health of Alaska's economy," Knowles said. "We've maintained this healthy economic environment by working hard to encourage new development, maintain the investments and services that are needed for the economy to grow, and take the proper steps to protect our assets and savings. "The biggest threat to our economy and jobs is the inability of the Legislature to make progress on a long-term fiscal plan," Knowles added. The S&P report calls Alaska's general credit characteristics "very strong," and notes "strong financial management with prudent reserve policies to maintain and enhance significant financial reserves." The report also cites the extension of the oil production curve due to continued investments in exploration and development activity and the state's low debt burden. The S&P report takes into account the ups and downs of Alaska's resource-based economy and current low prices for seafood, minerals, and timber. "Despite the volatile nature of the economic base, Alaska's financial position has historically remained strong," the S&P report notes. The rating agency also notes above average rates of growth in health care, business services, and tourism-related industries. The report notes a healthy cash balance in the Constitutional Budget Reserve Fund, the earnings reserve of the Permanent Fund, and the principal of the Permanent Fund itself. "As the value of the fund grows, it becomes an increasingly important component of the state's overall credit quality," the S&P report notes. "Alaska reaps significant economic benefits from the fund through the annual dividend program." According to the news release by the Office of the Governor, since taking office, the Knowles/Ulmer Administration has worked hard to maintain a stable business environment and grow Alaska's economy. The administration fought Legislative proposals to liquidate Alaska assets - "our seed corn," as the Governor put it - successfully protecting and growing the assets of the Alaska Housing Finance Corp. (AHFC), the Alaska Industrial Development and Export Authority (AIDEA) and the Post-Secondary Education Commission. Further the news release stated, through sound management and appointment of Alaska's best and brightest to state agencies, boards and commissions, Alaska's financial assets are healthy. As a result, Alaska's economy has grown in every single year of the 8-year Knowles-Ulmer Administration. "More than 65 percent of Alaskans now own their own homes, up nearly 10 percent in a decade, and the second highest home ownership rate in the nation," Knowles said. "And bank deposits, another sign of economic confidence, jumped nearly 30 percent." The news release also said that state agencies that create economic opportunities for Alaskans - AHFC and AIDEA - have built the asset base and paid dividends. AIDEA projects generated more than 2,700 construction jobs and nearly 2,000 permanent jobs in eight years. AHFC and AIDEA contributed $1.1 billion in dividends to the state treasury between 1994 and 2002 to help pay for vital public services. Alaska students received $50 million in stable, low cost loans for college and vocational training. Facing a $50 million deficit and default rate of nearly 20 percent in 1997, the agency now enjoys "AA" bond ratings and was able to lower its loan interest rate for students. The
value of the Permanent Fund reached a record high in 2000, producing
a record dividend that injected over $1 billion into Alaska's
economy and created 15,000 jobs. According to the news release,
the Constitutional Budget Reserve, the rainy day account legislators
use to cushion against oil prices fluctuations, will be larger
when the Knowles-Ulmer Administration leaves office than when
it began: $1.8 billion.
Source of News Release:
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