Deferred maintenance price tag is bigger than thought
The combined state and municipal backlog on deferred building maintenance is much bigger than thought. The state backlog, mostly University of Alaska buildings, is currently estimated at about $1.9 billion. When deferred maintenance on schools in the Anchorage School District and Matanuska–Susitna School District is added, the number grows to about $2.76 billion ($660.2 million for Anchorage and $201 million for Mat-Su). The state’s $1.9 billion includes about $1.1 billion for the University of Alaska and $43.3 million for local school projects listed on the Department of Education and Early Development “major maintenance list,” according to the state Office of Budget and Management, but the DEED list is mainly for rural schools in the Rural Education Attendance Area school districts, and have no projects listed for Anchorage or Mat-Su. The total deferred maintenance number is undoubtedly larger because Fairbanks, Juneau, Ketchikan and other municipalities also have deferred school maintenance.

Maintenance deferred in hopes of state funding
The incremental growth of the state deferred maintenance has been long recognized, and is a result of a long-term decline in oil revenues and the decisions by several governors and Legislatures (with the exception of former Gov. Sean Parnell) to devote resources to other budget priorities. Parnell, when governor, initiated an aggressive five-year program to get ahead of the curve, but while this dented the growth, escalation of deferred maintenance returned after Parnell left office. The surprising amount of Anchorage school deferred maintenance is mainly a result of that district gambling, in 2016, that the state would resume 50 percent payments on local school bond debt when a five-year moratorium in 2015 ends in 2020. The district has been able to keep up on basic maintenance (boilers, roofs, etc.) but the extra cash from the resumption of 50 percent debt reimbursement would have paid for a more aggressive tackling of maintenance, ASD officials told a fiscal policy task force of Commonwealth North on Aug. 16.

Mat-Su is in a somewhat similar situation. Had the state paid its expected full payment of 70 percent of Mat-Su school debt this year the money would have gone to projects on buildings, local school officials told us. Instead, the governor and Legislature authorized only a half payment, which reduced Mat-Su’s payment by about $9 million. Presumably, that means Mat-Su’s $201 million in deferred maintenance will go up. The problem is that neither the state nor the local school districts have a plan to deal with this.

State’s economy appears steady – for now
Alaska’s economy appears stable for now. It will take a while for the effects of state budget reductions to be felt. Continued uncertainties could be dampening new private investment, except in oil and gas, but there is no hard information on this. In July state wage and salary jobs, the best measure of economic trends, were up 0.5 percent from July 2018. June showed a similar small increase year-over-year. Petroleum employment grew a robust 5.4 percent in July year-over-year, a surprise because winter is usually the industry’s peak season. Construction was up 3 percent in July.