Wednesday, April 6, 2016

Alaska’s Finances Concern Commercial Fisheries

An economics professor at the University of Alaska’s Institute of Social and Economic Research is advising those engaged in the commercial fishing industry to keep a close eye on how Alaska works to resolve its current fiscal crisis.

Gunnar Knapp, the current director of ISER, noted in a presentation to ComFish 2016 in Kodiak on April 1, that the state is currently spending four times as much as it receives in revenues and paying for the deficit by drawing down on its savings.

To survive in fishing, the fishing industry needs to pay attention to fish politics, and in these times, also to pay attention to state politics, and be prepared to respond, he said. “Now is the time to make the case for the fishing industry,” he said. “This is a big deal. The fishing industry needs to pay attention and get involved.”

The problem emerged when Alaska, long dependent on income from taxes on the oil and gas industry, saw those revenues fall with the drop in the price of oil. Those oil prices are not likely to come back up enough to resolve the problem, and even if they do rise, there is the issue of declining oil production, he said.

The issue for the fisheries industry is as the pressure builds to cut state spending it will affect state agencies that have a big role in commercial fisheries in Alaska, from the Alaska Department of Fish and Game and Department of Commerce, which includes the Alaska Seafood Marketing Institute and commercial fishing loan programs. Knapp warned that there would also be intense pressure to find new revenues through fisheries taxes, user fees like fisheries permits, and other taxes, including those on income and motor fuels.

As the state tries to shift costs to local governments that could result in cuts to local revenue sharing, and local governments will respond by trying to boost local revenues with increased local property taxes, local fish taxes and harbor user fees, he said. Knapp cited a recent ISER report that noted that on a statewide basis local and state revenues from commercial fisheries in 2014 totaled $121 million, compared to $96.8 million in capital spending and operations spending for that industry. The data appear to suggest that fishing costs the state more than it brings in, unlike mining and tourism, he said.

Knapp also talked about current market conditions, including the impact of a large algae bloom that has killed off millions of farmed salmon in Chile. That algae bloom is terrible news for the Chileans, but good news for other farmed and wild salmon producers, he said.

Knapp said the good news for Alaska is that the farmed salmon prices, which had been going down, contributed to the negative problems Alaska had in past years, but have been reversed by rising prices. “This won’t fix everything in our markets by any means,” he said. “There’s still the problem of the exchange rates, but this is good news with regard to the sockeye (prices),” he said.

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