Protecting Our Economy: how a Constitutional Convention would damage our future.
- The Anchorage Economic Development Corporation’s 3-Year Outlook for Anchorage shows positive signs for economic growth and recovery.
- Certainty, stability, and predictability seem to be returning, boosting business and consumer confidence
- But the specter of a constitutional convention risks undermining all of that, sending Anchorage and Alaska backward and harming our economic prospects for years to come.
- A “no” vote on a constitutional convention this November will help preserve the stability and certainty that have powered our economic recovery so far.
Among American cities, Alaska’s largest city occupies the rare position of being able to say our economic future looks bright. But a constitutional convention would turn our sunny forecast dramatically darker.
This week, Anchorage Economic Development Corporation released its 3-year economic outlook, which found major industries recovering nicely from the pandemic and trending upward. Transportation, logistics, and tourism sectors are all “seeing strong demand” and construction companies are hiring workers like mad for new projects. Oil prices are up, and so is production. But these positive trends all rely on one thing: investment. And companies invest only when they have confidence in the stability and predictability of the economic playing field where they do business.
A constitutional convention will endanger that investment by infusing the toxicity of uncertainty into the laws that govern businesses operating in Alaska, from taxation to environmental protections to employer rights to employee rights to personal rights. Because most business-development investments are irreversible, companies generally prefer the option value of waiting for a situation to stabilize. In other words, they would prefer to hold onto their money rather than risk losing it.
This is not theory; we already know how uncertainty negatively impacts our economy. Several years ago, when oil prices were in the gutter, there was a lot of talk of imposing new taxes or cutting deeply into government services. This talk created uncertainty in the business sphere, resulting in several quantifiable economic losses. Let’s take a quick look:
- Between 2013 and 2017, non-oil private spending declined by $410 million.
- All capital spending, including oil, dropped between 2014 and 2017 by more than $2.5 billion. (That’s “billion,” with a “b”.)
- Uncertainty over state policies caused an estimated $200-600 million decline in 2017 construction investment.
A constitutional convention will endanger that investment by infusing the toxicity of uncertainty into the laws that govern businesses operating in Alaska.
If Alaska approves a constitutional convention, we would be sending out the message that – quite literally – every law in the state might change. The entire process would take around four years to complete, which is an incredibly long time for our state to be in limbo. Smart investors don’t like change or medium-term uncertainty when it comes to laws and regulations.
Bright Spots – and A Note of Caution
So, now that we know some of the job-killing, money-draining effects of policy uncertainty, let’s look at the positive trends we’d have to be willing to gamble away by playing games with our Constitution.
Just halfway through this year:
- The transportation sector was up 600 jobs over pre-pandemic 2019.
- Tourism has powered a rise in hospitality jobs, up 2,000 (although still down from 2019).
- Construction added 320 jobs, with predictions of more to come.
- Engineering, architecture, and other fields related to construction are up 500 jobs.
- Two major oil projects hope to receive government approval soon, adding jobs, pipeline throughput, and payments into the Permanent Fund.
- Statewide personal income has risen two years in a row and is predicted to continue rising.
- Air passengers increased a whopping 46%, still below 2019 but showing strong, fast recovery.
- FedEx announced its intent to build a new $200 million cargo sorting facility at the Anchorage Airport.
- Construction building permits are up 21% over 2021.
- Cruise ship port visits in Southcentral, convention bookings, and Anchorage hotel occupancy are all up for 2021.
- Car rentals in Anchorage are up an incredible 129% over 2019.
- Oil production is up to 494,513 barrels per day, up 4,000 barrels per day over 2021, and is expected to continue rising.
All of these are bright spots, and point to a strong future for our economy. But the uncertainty, instability, and unpredictability of a constitutional convention risk upending all of that progress.
And there’s an additional note of caution: Anchorage experienced a fifth consecutive year of population decline due mostly to people moving away, and our working-age population fell by 15,000 persons. The shortage of reliable, qualified workers is one of the primary factors limiting our economy’s growth.
If a constitutional convention puts business investment on hold, some jobs will likely dry up, and we’ll also risk losing even more of our working-age population to outmigration. The worsening shortage of workers will lead to worsening or negative economic growth, which will lead to more people moving out of the state. Remember, the constitutional convention process will likely take at least four years to complete – that’s plenty of time for such a vicious cycle to take hold.
Maintaining a Positive Economic Outlook
However, we could choose to ensure a stable business environment by voting “NO!” on a constitutional convention, and maintain the certainty and stability needed to keep our economy recovering. This year, Anchorage was ranked the 23rd best city to live in the United States. A big part of that is low taxes and good jobs with great government services, all powered by a strong economy…
…which is powered by a stable, predictable body of laws protected by our Constitution.
A constitutional convention would cut that progress off at the knees, fostering uncertainty, and risking economic hardship and regression for years to come.
Our economy seems to have a bright future, with optimism and opportunity for growth ever-present. But a constitutional convention would cut that progress off at the knees, fostering uncertainty, and risking economic hardship and regression for years to come. Let’s protect the progress we’ve made – vote “no” on the constitutional convention ballot question this November.