The Impact of Federal Dollars On Alaska’s Economy - 6/23/26

Hey, Brett and Brock, do you know if Bob Leffler will be joining us soon? Uh, let me go check on him real quick. All right, appreciate it.

Oh, there's Bob.

Bob, I'm going to— you can share.

What?

Come on. Oh, sorry.

Oops. And Ross, you can hear me? Yeah, I can hear you fine. I accidentally made the wrong person a co-host, so let me try that again.

All right, you should be a co-host now, so that makes it so you can share a PowerPoint if you happen to have one. I do. Okay, great. Hey guys. All right, who just said hello?

It's Veronica. Hi Veronica. So thank you for doing this. Let me know if you want my help in any way. And also Tom Elkins in my office is online if he can be of any help in terms of monitoring or whatever.

All right, thank you Veronica. All right, well let me kick things off since it is 12 o'clock and I'm just do a quick little brief introduction. Ross Johnston. Let me make sure I have my video on. Yes, I do.

Great. I am Ross Johnston, Executive Director of Commonwealth North. We put together forums like this and workshops and other things that illuminate Alaska issues. I'd like to thank our cornerstone members, ConocoPhillips and GCI. Without their support, we wouldn't be able to do fun and great stuff like this.

A lot of the conversations that we have exist between the— in the Venn diagram where things benefit Alaskans and also has the support of our members. And that's how we choose to do the forums. So if you are interested in what you see today, I do urge you to actually join as a member. Here are two quotes that I love to show. I know everyone is familiar with these quotes.

We hear them all the time. I'll tell you who never says these quotes. It was neither Bill Egan and Wally Hickel who founded our organization. They are people who didn't suggest other people should be doing things. They said that we as Alaskans are the ones who decide our destiny, and that is how Commonwealth North was created.

We're here to help move the locus of control away from saying that things happen to us, to saying that we make things happen. This is our board. We represent multiple industries, multiple regions of Alaska. Just, it's— I am very proud of our board. Honestly, everyone on there has been a huge benefit to the organization, and we wouldn't be able to do nearly as much without their support and activities.

A lot of the time with our forums, I said this last time, it's like the blind men with the elephant where each speaker touches a different part of the elephant and tells us what they feel about a specific issue. By having multiple people talking to us about different areas of the elephant, we start getting an overall idea of what the elephant looks like. Because a lot of times when you have one person, touching one area of the elephant. You might— they might not even be touching the elephant at all. And that is what we're— what you're getting back from them.

So we like to have a much more well-rounded picture about complex issues so that we have a better understanding of what's going on.

So once again, if any of this stuff interests you, we do welcome you to join us as a member. Today, our conversation is the impact of federal dollars on Alaska's economy. We did this last year with Build Alaska and ISER. It went really, really well. It was really interesting.

So, big thank you to both of our co-hosts, ICER and Build Alaska. Today we'll be hearing from Brett Watson, Brock Wilson, and Bob Leffler. And without further ado, Brett, can I have you kick things off?

Let's see, I believe, Brock, did you want to set up the forum for us this afternoon? So I'm going to give sort of a brief roadmap. Bob Loeffler is going to begin and he's going to give sort of a mental model of the Alaskan economy and sort of show that sort of thinking about that regionally. Brett's going to follow after that. He's going to discuss sort of the historical component of federal just broadly federal spending in Alaska.

And then I'll round it off and discuss sort of changes to the federal workforce in Alaska. And so I'll turn it over to Bob at this point. And then I should say that we're hoping to sort of present this information and then have sort of a Q&A at the end for any sort of questions about the material presented. So I'll turn it over to Bob. Oh, sorry.

Thank you, Brock, for mentioning that. I did forget to mention that if you have any questions about any of the anything that was mentioned today, please add it to the notes, I will, or to the chat, and I will ask questions based on what I see on the chat. Otherwise, if everyone unmutes themselves and tries to talk at the same time, it can get really confusing. So just please, questions in the chat box only. So thank you guys.

Okay, thanks Ross. And what I'd like to do is talk a little bit theoretically about the Alaskan economy. And I do have— because you are required as a professor at UAA to use a PowerPoint anytime you open your mouth, let me try to share my screen and I will do that.

Can you see my screen? Oops, just moved. Wait, wait, picture.

Picture just moved.

Hold on. There we go. So can you see the screen, Ross? Yeah, I can. Yes, I can see the screen.

All right. So what I'd like to do is I'd like to explain, we have a very sophisticated model of the economy at ICER, and I'd like to explain it. And there's important theoretical constructs that really inform you for the details that Brett and Brock are going to give you. So our— if you will hold your breath— our theoretical model of the economy is Alaska's economy is really like a leaky bucket. And I— and so the money that comes into the economy from outside, like a bucket, if you pour, pour water in, the amount of water in the bucket is dependent on how much you pour in and how much leaks out.

And that's like our economy. So we sell things to others and that brings money into the economy. But every time you go to the store, some of your money leaks out. And the way we think about it, uh, is so, for example, if roughly a third of the money coming into our economy is from the federal government, then that circulates around, if you will, in the bucket. So for example, if you're a piano teacher, you go, well, I don't work for the federal government.

Uh, none of my piano students work for the federal government. Their parents don't work for the federal government, but yet you do work for the federal government because of a third of our money comes in. Those federal employees spend a little at REI and spend a little here and spend a little there. And those employees spend money elsewhere. And eventually a third of the total money coming in is what powers the economy from the federal government.

And, and all of us receive that in a way. So what comes in is, uh, this was supposed to be, uh, animated, but I don't, we don't need it that way. Well, let me actually, let me try. Can you still— oh, forget it, I give up.

Um, uh, so, um, oil— the largest amount of money coming in is the federal government, then oil exports, then of course commercial fishing, tourism, cargo, FedEx, um And every time you go to a business, some of that money goes out of state. You go to REI to buy a bicycle. That bicycle isn't built here. You take an out-of-state vacation. If you, um, go to Amazon, much of that money comes out of state.

And so every time, if a third of it goes out of state, then two-thirds goes— is kept by those employees and they spend it. And a third of that goes out of state. So what money comes into our economy? Well, in order of appearance, it's this way. The federal government is our largest— our— the largest amount of money coming into the economy, followed by oil and gas.

And then following a long way away is fishing, mining, tourism. Cargo, uh, at the airport, permanent fund draw and dividends. So that's money that comes in, in the sense that our permanent fund is in banks outside of Alaska and the interest we get comes from outside Alaska. And the last is a retiree. So I, for example, get a pension.

I used to work for the state. And I'm Tier 1 employee, so I just want to thank you all for giving me a good retirement. And every month I get money and I, I spend it at Wild Scoops or some other location, and that helps power Alaska. So it's important then to think about it. If the federal government, for example, has Oh, it's roughly 47,000 employees.

What percentage of Alaska's employees are that? Well, the total number of employees in Alaska is roughly 300, but that's the wrong number to use. It's the number of— it's, it's our— what we would call as economists, our export employment. So the denominator of how important, if you're trying to measure how important the federal government is not the total amount of money in the Alaskan economy or the total amount of employees, but the amount funded by money that comes in from outside. And it's important way to think about the importance of an industry is not relative to the Alaskan economy, although that is one way to think about it.

But for our purposes, for powering the Alaskan economy, it's the proportion of the total money coming in. So as we go through, as Brett and Brock talk about federal government, we have to think about it in those terms. Now I'm going to just do one more thing and I'm going to want to talk about it regionally. But before I, I go there, does anybody have any questions just on that as a concept? As, as money coming in is what powers our economy, it's the leaky bucket model of the economy, which is what we use.

Okay, so let me go forward. Um, if you look at where we think of the Alaskan economy, but they're really in some ways, it's not an Alaskan economy, it's multiple smaller economies. So let's look both at military and non-military and where it occurs in Alaska. This is active military spending. Or employment, if you will, and it is really our hubs.

So it's Fairbanks, which is Eielson and their first base, the Greeley. Anchorage, it's J-Bear. Kodiak, for this table, is Coast Guard is included, and it's the Coast Guard base. And then it falls off much smaller And then it's dribs and drabs, if you will. So where the military is concentrated is where our bases are, and the rest of the economy doesn't benefit the same way from— or the, the other portions of Alaska doesn't benefit the same as much from active military spending.

If you go to civilian spending, here is a map of civilian spending.. And it tends to be concentrated in some— in similar ways. So, um, if you look at the dark areas of the map— hold on, I'm going to move to my cheat sheet. Um, oops, wrong cheat sheet. If you look at the dark areas of the map, you would expect Anchorage and Fairbanks to have many civilian employees, but This is a percentage of total jobs.

Why is Denali so high? Well, the answer there is Denali National Park. They have a lot of employees. If you look at Hoonah, why is Hoonah so dark? The answer is there's not a lot of employment except for Glacier Bay.

If you look at Southeast Fairbanks, it's actually— it is military employ— It is the civilian employees supporting the military. So we have similar concentrations around our major facilities. If you go out in the regional areas, there's a lot— the employment is a lot less. And in fact, in most of these areas, I hopefully you can see my cursor, the major civilian employee is the postmaster or postmistress. So the takeaway from this, I hope, is one, you think one of our, our economy is in the leaky budget, in the leaky bucket school.

It's money coming in and federal government is the most important industry, if you will, that brings money in. And second, where it's spent. Is really regionally concentrated at the federal facilities. So with that, I'm going to turn it over to Brett, I think, and I'm going to stop sharing. And there we go.

Yeah, thanks, Bob. And so Bob did a really good job of setting the table for us here in describing the kind of model that regional economists use to characterize the way that regional economies grow. Many regional economists have often commented that Alaska's economy is a bit like a three-legged stool, that there's kind of three pillars that support the rest of our, the rest of our economy. Bob described that metaphor as a bucket in which industries like the oil and gas industry, the federal government, and kind of all of our other basic industries bring new money into the state. That money sloshes around before it leaks out as we purchase goods and services from outside the state.

So one of the things that I like to pay attention to is how sturdy is that three-legged stool, and particularly how sturdy are each of those three legs on our three-legged stool. So we know that the oil and gas industry is quite volatile, right? Oil prices are high today, or at least high a couple of weeks ago, have fallen in kind of recent days on geopolitical instability in the Middle East. So oil prices go up and down. Oil production has generally been falling and is projected— but is projected to increase in the near future as, as new projects come online.

Um, and so there's a lot of volatility in the oil and gas industry and the new revenue that it's bringing into the state. Um, but what's been going on in the federal government, and particularly what's been going on with respect to federal spending over the last 10 years or so in the state of Alaska— and that's a really important period for our state because 50 or 10 years ago, the state of Alaska entered into a pretty severe recession driven by downturns in oil prices and spent the better part of the 2010s, later 2010s, clawing out of that recession before we entered the COVID pandemic. The state reentered a recession, has been clawing its way back out of that recession. So what contribution is the oil and gas industry and the federal government and all of our other basic industries been playing in that economic recovery?

So what I'd like to do is just share some, some statistics on what's been going on with federal spending in Alaska kind of over this key period of the last 10 years as we've experienced this economic recovery. So between 2015, the start of the Alaska recession, and 2023, this is the most recent year that we have really good data for federal spending apportioned across states. Federal spending grew by about $8.7 billion in nominal terms, and I'm going to use nominal terms here as opposed to inflation-adjusted terms because I'll compare this to nominal, nominal dollars in my next slide. But just be aware that there's been some pretty significant inflation over this period. So that's not real spending power of the federal government, but nominal spending.

Federal spending grew by $8.7 billion from just, just under $11 billion in federal fiscal year 2015 to just under $19, just under $20 billion in federal fiscal year 2023. Now, there was still some pretty significant COVID spending that was going on as part of the federal fiscal year 2023 budget. So if you take that federal or that COVID spending out, you get about $18 billion, just over $18 billion in federal spending in the state of Alaska. We can also kind of break that down between the major categories of federal spending. Direct payments, those are things like payments for Social Security and Medicare.

Those are about $6.5 billion in 2023. Grants. Medicaid is a really important federal block grant program, and that's, that's accounted for in these dollars here. Between 2015 and 2023, the state of Alaska expanded Medicaid eligibility as part of the Affordable Care Act. And so our receipt of federal dollars, part of that block grant program expanded.

In 2023, the state of Alaska received about $4 billion in federal spending associated with all grants, but including importantly Medicaid. You see, probably the biggest category of growth though across all of these spending categories grew 150%, uh, was federal spending in contracts. So contracts are spending that the various federal agencies engage in. The largest federal agency that spends money in the state of Alaska is the Department of Department of Defense. Um, Bob laid out the presence of military spending across the state on the various military bases.

There are large purchaser of goods and services. They purchase construction services, they purchase utility services, they purchase goods, commodities from local communities. Um, and so when they procure those services or goods, um, they do it in the form of contracts, and you can see that contract spending has really grown quite a bit, uh, and accounted for about $4.5 billion in FY 23. And then there's a large federal workforce presence in the state of Alaska, and Brock's gonna tell you a little bit more about that employment landscape. There have been some really big changes in the federal employment landscape nationally associated with several federal initiatives to try to reduce the size of the federal workforce.

Brock's gonna tell you about how that's materialized specifically and in what forms here in the state of Alaska. And then, as I mentioned, the COVID-19 pandemic, the federal government really ramped up spending across states. And so if you kind of account for that sort of temporary boost in federal spending, about just over $1 billion, $1.3 billion in 2023. So let's put that federal spending into context. You know, Bob laid out how important federal spending, oil and gas industry, and our other basic industries are to supporting that new revenue coming into this, the Alaskan economy.

So let's put these numbers into context. Like I said, just under $11 billion of federal government spending in 2020 or 2015.

Just under $20 billion of federal spending in 2023. Let's compare that to the total size of the Alaskan economy in using gross domestic product as, as the denominator here. Alaska's gross domestic product in 2015 was $51 billion, and in 2023 that had grown to $68 billion. And so federal spending accounted for just under 30% of our 2023 total GDP. But as Bob laid out for you, what you really have to think about here is not, not just how federal spending is reflective of our overall GDP, but how it's reflective of that new money coming into the state, how large of an economic driver it is, is it, with respect to all that new money, new money that flows into the state.

So if you think about the difference in our GDP between 2015 and 2023, our state's economy grew by $16.5 billion. Well, federal spending grew by just under $9 billion, meaning half of the growth in our total GDP, both our basic GDP and all of our non-basic GDP, all the money sloshing around in the bucket, not just the new money coming into the bucket.

Around half of the growth in our total GDP, half the water in the bucket was federal spending growth. And I think that that's, that's pretty significant, especially if you compare it to some of our other key basic sector industries. For example, oil and gas, which Bob mentioned, is kind of our second largest basic sector industry in the, in the state. That's new money coming in. Couple of different ways that you can measure oil and gas's new revenue that it's bringing in, either in gross value terms or as a component of GDP.

Um, but either way you calculate this contribution of the oil and gas industry, it's grown over this time period between $3 and $4.5 billion. Or less than half of the growth in federal spending over the same time period. What about for some of our other key basic sector industries like the hard rock mining industry or the fishing industry? Well, the fishing industry over this time period grew by about a quarter billion dollars while the hard rock mining industry grew by just under a billion dollars. And so I think that the last decade really represents a really significant change for the economy of the state of Alaska, where our growth over the last decade has been really importantly driven by federal government.

Half of our GDP growth driven by growth in federal spending over this time period relative to our other basic sector industries. And so that three-legged stool metaphor seems like it's, it's time to maybe revive it in the face of some of these, these emerging trends.

I haven't talked much about what's been going on more recently. Obviously, there's been a lot of changes to what's been going on. With respect to federal spending. A lot of news being made of, of what's been happening with federal spending over the last year or so. Unfortunately, we lack really high-quality data to be able to speak to that in much specificity on the spending side.

However, we do have a better picture of what's been going on on the federal employment side, and that's what Brock is going to speak to you now about. How has the Deferred Resignation Program impacted federal employment? What about reductions in force? And so I'll turn it over to Brock now and he'll tell you about what's been going on in the federal employment landscape. Thanks, Brett.

Let me just share screen.

You guys can all see this? I see a nod. Okay, great. So I think Brett did a great job and Bob, thank you as well, sort of just characterizing some of the changes we've seen and also how we should think about sort of the federal government.

I am going to talk a little bit more about just the federal workforce in Alaska and particularly the sort of recent changes we've seen. So I think sort of a nice big picture summary statistics we care about, over $1.5 billion is federal civilian wages paid to Alaskan federal workers, and that's approximately $100,000 per job. So these are high-paying jobs. There's approximately 15,500 federal workers living in Alaska, and across all states, we're the third highest share of federal workers in a state's workforce. So this is really to sort of set the stage that the federal workforce plays a large component in our economy, and changes at the national level fall particularly harder on states with higher reliance on the federal workforce.

And I'm going to sort of characterize that a little bit more, but just setting that stage that we might care about these national-level changes, uh, just given the fact that we have a larger reliance on the federal workforce. Uh, so this is broadly just going to say I'm going to show you some data with, uh, sort of the internal, uh, movements. I'm going to be able to characterize who got cut, who took the buyout, um, and, and be able to say, uh, which of those things are larger.

I want to start by just doing some contextual information here. So this is me providing that information again across all states. We are third highest in reliance on the federal workforce. The only two above that are Maryland and Hawaii. And you can see close behind that is Virginia.

So I think broadly the way I'm sort of characterizing this is like the Capital Area, and then Alaska, right? We are— we're particularly reliant for federal workers.

Within Alaska, these are the different industries, and you can see that the federal government is 9th largest. This is as of 2024 Q3, is 9th largest in employment across all these sectors. But when you look at the average salary of those of federal workers, it's quite large. It's the third highest. And as I had said earlier, they're making approximately $100,000 annually.

And so what this is to say is that these workers are relatively well paid and changes to that have larger consequences because the jobs that they're— the annual salaries they're making is quite large.

So this is sort of playing off a little bit of what Bob had discussed earlier. What I want to show here is that I think, and I think this is a fair conception, but that when you were to think about the distribution of federal workers, this is that map. So this is to say, if you took the entire distribution, all federal workers, and asked in each census district where would they be located, 53% of them would be located in the Anchorage area and then 21% in the Fairbanks area. And so an immediate sort of thought here is to say, oh, well, these are more urban area workers.

But I think what Bob showed earlier is really important to highlight. It's not thinking about the concentration, but instead thinking about the per capita relevance of this federal workforce. And that is to say, when you look at rural counties, they are more reliant on the federal workforce than urban centers. The Denali, for example, a large component of their GDP is the federal workforce. So changes that, you know, these national-level changes are going to be falling harder on these rural parts of Alaska, given that they're more reliant on the Alaska federal workforce.

When you're thinking about sort of what's Again, this is using 2024 data that I'm going to be showing soon, the changes. But this is sort of the distribution of, of where these workers are working in different industries— sorry, agencies. So the Department of Interior, the Air Force, Army, Transportation, Agriculture. When we break that down a little bit more, that's the FAA, Veterans Health Administration, the Forest Service, the National Park Service. So industries like resource, veterans health, FAA, etc.

And these are sort of places you should be thinking about when we're, when we're trying to understand where federal workers are working in Alaska.

Okay. So with that context, what I want to now shift gears and talk about is there's been large changes in D.C. for this federal workforce. Particularly, there's been sort of 4 big levers that have changed how we should be thinking about the federal workforce. So the first was this buyout, this deferred resignation program. That was, you would resign today, you would get some amount of pay for the next few months, and then you would leave the workforce.

Separately, there was a reduction in force. Some agencies completely were, they lost a large amount of personnel. Separately, there was a probationary termination. So people who had less than a year of experience, were, were sent a termination notice, and then there was a hiring freeze. So what I want to be able to say is like, which of these components has largely changed the federal workforce?

So big picture, between April 2024 to April 2026, we've seen across the entire nation a 14.8% decline in the headcount of the US federal civilian workforce. There's a large decline. Alaska specifically has seen a 15.8% decline. So we are seeing a larger decline than most other places.

This is that shown visually. So I'm indexing it April 2024.. And now you can see by April 2026, we've taken a larger loss. That is this, the red line. And I think one thing to sort of caveat here or start with is if we look at sort of prior to April 2024 and we look at the trend upwards, we can see that the nation saw larger growth in federal jobs compared to Alaska.

That is, the trend upward for Alaska-specific growth in federal workforce was smaller. So sort of putting that together with the post-2024, we've seen in the past 6 to 7 years less growth and a larger falloff since this recent changes.

So this is now showing that sort of by state, which states took the larger, the largest declines in the federal workforce.. And here we can see Alaska is quite high in that, probably about the 8th largest decline.

Okay, so now I want to discuss a little bit about those 4 different components and see what that looks like at a national level. So here is these, uh, the probationary firing wave. So this is saying that prior to, uh, the firing wave, approximately 330 employees every month were being terminated, and that's generally just due to low performance. So there was a natural sort of baseline of workers who were being terminated just due to low performance. And here, after that large wave, we can see that spike to at most maybe 1,700 to 1,800 employees in a given month.

But when we look at the reduction in force, the probationary termination, and the buyouts collectively, at a national scale, by far the buyouts are what have caused the largest decline in the federal workforce. That is, we're talking about at a national level here— oops, gotta move that over— in one month, approximately almost 75,000 to 80,000 workers suddenly leaving in a second wave, approximately. And I should have to caveat, that's probably closer to 40,000, 50,000, and then a second wave there. And so these, these terminations, they're very real and they affected a set of people by a much larger ratio. The reduction is coming from these people who took out these, the, the DRP or the Deferred Resignation Program.

On the—. So those are the separations. That's the side of where people are leaving. This is here showing the federal hiring, and you can see prior to the hiring freeze at a national level, we were seeing approximately 20,000 new hires into the federal workforce. Afterwards, we're seeing approximately 8,000.

So we have seen a large reduction in the number of new hires that are federal employees.

So now I want to break this down into— from the, the national level to the Alaska-specific. So here's that graph again, breaking out the reduction in forces, the probationary terminations. And again, this is to highlight that Alaska has seen the largest reduction, particularly due to the Deferred Resignation Program, that a large component of who is taking— who is leaving are those that were taking the DRP. When we're thinking about this DRP, these are workers that are relatively experienced. These are workers that have had approximately 10 years working for the federal government.

These are people who carry large amounts of human capital and are important to these, you know, offices and making sure that things get processed.

And so to sort of reaffirm, Alaska did not see a large share of their workers cut. This is more so the case for places like D.C., Maryland, more capital-centric areas. Alaska did not experience a large cut to the workforce due to the RIFs or the probationary firings.

If anything, it's coming from these— the defined— the DRP. This is now looking at the, the hires monthly for Alaska federal workers. And so you can see a couple of different things. First off, we have a natural trend or a natural seasonality to how we hire. This just comes from some components such as like the National Park Service, where we hire and onboard a set amount of federal workers to help carry out some of these national parks.

And then there's some offboarding. And so prior, there's some, you know, baseline workers that are being hired in the offseason. And we can see that that offseason hiring has declined significantly. But also we're seeing lower peaks for the seasonal workers that we're bringing in.

So to sort of put all of this together on this left panel here, this blue line represents new hires in a given month. This red line represents separations. And so we can see since this hiring freeze that there's been lower peaks, less hiring. Separately, there's a large exodus, large amount of workers that have left. And so when we put those two together, In this right panel, this is the net change when we add those two together.

And we could see in the previous sort of regime there is some balance. And we can see now since January that there's been a more of an exodus, that there's less— there's a flow out for the federal workforce in Alaska.

So given that movement, what I want to characterize next is where, where are we seeing this change in the federal workforce. And so by and large, the set of people that have left have come from the Department of the Interior, the Department of Agriculture, Department of Commerce, the Department of Transportation. Those are the set of agencies that are seeing workers leave. When we look at the type of jobs for those people, they are in biological sciences, they're in maintenance, they're in physical sciences. So these are jobs that are not in administrative roles but are generally more in field jobs.

To be a little bit more specific, we're talking about park rangers, biological science technicians, maintenance mechanics, forestry technicians. These are sort of the jobs that have, you know, direct implications for their particular field for what they were doing. Okay, so this is broadly what has changed. We've seen a decline in the federal workforce in Alaska over these past 2 years, approximately a 15.8% decline. And this is partly just due to 2 large moving pieces.

One, the DRP. There's a large set of people who have taken the, the buyouts, and with that, the set of people taking those buyouts are generally, they're on average 9-year veterans who have had a large amount of experience in these federal workforces. And then second, there's been a decline in just due to the hiring freeze, and we can see that has been clearly evident going forth in the decline in our federal sector.

With that, thank you guys for listening.

I think at this point we'll transition to the Q&A. Q&A, Ross, is that how we should—. Sure, that sounds great. I don't see any questions in the chat. If you have questions, please do put them inside the chat.

Otherwise, we will wrap up early and everyone can go about their day. I have a couple general questions, and you may or may not know the answers to this. It's just a point of interest for myself. I think it was, what, 22.9% of workers in Alaska are non-residents. You can correct my numbers because I always get them wrong.

When we're looking at the massive amount of contracts in Alaska, how many of those contracts are being fulfilled by Alaska employers and how many are being fulfilled by companies from outside of Alaska doing fulfillment in Alaska? Or is there any way of knowing that?

Yeah, it is possible to separate whether or not the recipient organization is, is located in the state or whether they are just providing services in the state. You know, I'll note that probably a preponderance of contracts for federal agencies are serviced by ANCs. And so, you know, those are certainly organizations that are headquartered in Alaska, likely have a significant Alaska workforce presence, and have a significant shareholder base inside of Alaska. So, like I said, you know, that's not every contract, and certainly would be worth the exercise to figure out exactly what proportion of federal contracts were being serviced by ANCs, but there's a significant number of the largest contracts that are serviced by ANCs in the state. Um, I, for defense contracts, the, the top contractor was ASRC, second was Doyon, fifth was Chugach, and seventh was the Aleut Corporation, tenth was Koniag.

So we have 5 of our 12 were in the top 10 contractors for defense. I don't have it for civilian.

Thank you. Those are good answers. Um, you know, as I see a question here, um, and I think as an interesting— and I don't know if you could answer this, but where do the federal workers who leave due to DRP, uh, or, uh, forced resignation, specifically in rural Alaska, do they find other employment opportunities, or how does that affect the local economies where there's a much greater share of federal workers? Yeah, I think that's an ongoing question that we'd all like to know. I mean, the data linkage to being able to say where these people, uh, started and went, um, is a little bit trickier.

Um, it requires sort of a, a data set that has your ongoing employment, and it's a little bit trickier to answer. Um, I would say that just from decent theory that a lot of these people who are taking these resignations would probably be taking employment in the private industry. Unfortunately, the ability to track that is a little tricky just due to the unemployment data and the way it exists currently. But that's something that we would like to answer, and that's sort of an ongoing question that we're working towards getting a better grasp on. I would say that, that there are some ways to look at it.

So if you look at the employees from federal facilities, if you will, Denali National Park, Glacier Bay National Park, people around the bases, they may have a different— some of them may be leaving Alaska. We don't know. If you look at the much, much smaller group of employees who are in real rural areas, they tend to be more like postmaster, postmistress. They're much less likely to leave, but there are far fewer of them.

So every— early last year, there were several presidential executive orders that specified Alaska's having special importance, especially with oil and gas, critical minerals, and stuff. Do you—. Is there— do you see any federal spending moving in this direction for those special executive orders or any other type of movement that might influence Alaska's economy?

Bob, you might be able to speak to some of the direct investments that the Department of Energy and the Department of Defense have made in various mineral development projects in the state. Sure. I mean, the headline is really that the federal government invested, I can't remember, but a significant amount in with Trilogy Metals, which would increase spending by, they took an equity stake in Trilogy Metals, which is one of the mineral companies in the Ambler District. And so one would expect that that increased employment. They made a, they gave a grant to Graphite One, which accelerated their movement towards permitting.

They gave a grant— Graphite One is in the Nome area. They gave a grant to Nova Minerals for production of antimony, which actually requires them to produce antimony from their prospect in the southern Alaska Range at the end of where the West Sitna Road would go., and it requires them to put a, uh, and actually a small antimony processing facility, which I believe they're putting near Point McKenzie. And there was, uh, Brett and I were debating whether it was $45 million or $80 million for the Terra Project, which is a carbon capture coal facility, um, that they want to put in, um, 20 miles south of, west of Sequoia. So those are, those are significant investments, and one would assume that they are reflected in a significant increase in, in the movement of those projects, bringing them toward market faster should they ever get there.

So employment has fallen with federal spending, but have we seen any offset with like the amount of contracts in 2026, or is it too early to say that, I mean, because like, you know, anytime that a company lays off a high percentage of its workforce, they go to contractors.

Is it too early to say whether or not some of that federal employment has moved to contracting, or do you have any indication of that? It has been hard to It's been hard to track that quite yet. It's a little early, but I think it's a little, it's a little contextual to the agency we're discussing. So for example, National Park Service, a little bit less of that sort of contractual business, but other things maybe more so. But it's something that we definitely would like to follow in terms of where, where is that shift?

Do we see uptick in another avenue that this you might see is that actually state governments are going to try and compensate for some of these reductions in services by themselves hiring. So if you have less fish technicians, maybe you hire more from the state side. So that's one avenue to being able to grasp and see all that. It's been a little early for the data to be able to speak to that.

Okay, and then— sorry, Bob. I was just going to say, in terms of federal spending, which would— and the association with contractors, I mean, I know that some of our congressional delegation has been bragging about the increase in icebreakers with homeporting in Juneau and Kodiak and Nome, and that will, that will play out over the next decade. It doesn't necessarily play out now, but that will be significant both in terms of federal employment and contractors. And the same, I believe there's a new F-30-something wing that's going to go in interior Alaska. And again, those are very significant employment, both in terms of new federal employees, their spouses and families, and in associated federal procurement.

Okay. And then, have you guys been tracking at all the new U.S. Coast Guard icebreakers that are coming and how those might might actually impact Southeast Alaska or wherever they might land?

I don't— I certainly don't have the details, but between Kodiak, Juneau, places to be— the player to be named later— or possibly Nome, it will have a significant effect. Okay. I don't know if Brock or Brett have the details. No, I just— I think that you make an important point there, Bob, which is that while numerically the increase in employment might seem small at a statewide aggregate level, that these could represent really significant investments in the communities in which these, these assets are located or homeported, that, you know, the spending associated with them and the employment associated with them are kind of disproportionate with respect to the size of those communities. We might, you know, if those vessels were homeported in Anchorage, not that that's technically possible, I'm not sure, you know, the economic impacts would be more minor relative to the size of the economy here.

But they're, you know, larger relative to the local economies in the places where they're likely to be present. The other— I was going to say the other way was that, you know, everybody, politicians particularly, are like, we want to grow our economy, grow our economy. Are we good at growing our economy? Well, maybe a little bit with respect to tourism, oil and gas, and, um, uh, uh, mining. But what are we good at, at growing our economy?

We're really good at growing our economy through the work of our congressional delegation, whoever that happens to be at the time. Like, we're really good at getting money from the federal government. We're less good at getting oil, minerals, or shaking down tourists for money.

And I'm not suggesting that's what we want to be good at. I'm, you know, it just is what it is.

Yeah. And just as a note, Wanetta from Swampsea did say that $82 million for housing in Kodiak for the U.S. Coast Guard housing is underway. She also had a follow-up question about Alcom announced potentially spending $8.2 billion in construction spending over the next 5 years. And what that might have as an economic impact on Alaska's economy and potential Alaska labor market. And I have— I don't have any context to where that's being spent or what the construction is supposed to do.

Yeah, I think we should expect that that will increase, you know, opportunity and jobs for people to to take on. And then there'll probably be some potential migration in-state, sort of the natural things we might imagine with this large increase in construction spending.

So the Alaska GDP is what, $70 billion approximately? Give or take. Yeah. Yeah. So like with that $70 billion and this is, I mean, with the federal the amount being spent by the federal government being one of the least leakiest, I'm assuming, of GDP that comes into the state, the amount that circulates more.

Like, what are the industries that actually have more money stay of the GDP that's created? How much what are the industries that actually have more money stay in the state versus have leave the state, or do you have any idea what that might be? Mm-hmm. Like, for instance, like we were talking, I mean, Bob was just saying that, you know, like, we're not really good at shaking tourists down. So like, where, where, if the federal government were to cut back its spending, where should we look to, you know, make up that loss of employment and income?

I mean, just in terms of where federal dollars are sticking, I mean, a large share of where those federal dollars are going is in the healthcare industry. You know, a large portion of healthcare spending is on labor, and that labor, while there's obviously some, you know, travel workforce there, a large number of those workers live in state. And so, you know, the money's hitting where it sticks there or sticking where it hits, I suppose. But, you know, healthcare is non-basic industry, right? It's part of the water that sloshes around the bucket, not new money that's coming in.

It absorbs some of that money and prevents it from leaking out to the extent that those services are provided here and not in, you know, associated with healthcare tourism, right, in Seattle or something. Um, but in terms of, you know, where there might be opportunities to think about economic diversification or new income streams, you know, Bob mentioned a couple of the mineral development projects, um, that the administration is trying to provide some seed funding for, and then also kind of enabling regulatory, uh, you know, favorable regulatory environment. Um, you know, there's also probably some opportunities in tourism. Um, you know, every time I go down to Hawaii, I always marvel at how much of an economy that they can support on the basis of tourism plus a large military presence, which seems increasingly like where our economy is headed. But it's just an observation.

Yeah, I think I want to pick up just one last thing, which is I think for me, one of the frames that I carry is that I would think about the federal workforce as potentially a complement to our base, to our industry, rather than a substitute. For example, you know, cruise ships bring in people, those people go to Denali, and the complement being that if Denali no longer has park rangers, people don't go to Denali because there's no ability to get basic access, etc. So a lot of our industries rely on our federal counterparts to be able to provide the services that they do so that they can do their business. And so this is to say that it's a little— I'm a little cautious about the framing of Well, if federal workforce goes down, can we see an increase elsewhere? Because it might be the case that that also declines private industry because that private industry needed the federal workforce to be working for their industry to be working.

And it sounds like combining Bob's answer with Brett's, the best thing that we could do in order to circulate more money from tourism is have more dangerous activities where they seek healthcare, like maybe feeding Kodiak brown bear. Well, yeah, there's also, I mean, I have a good friend of mine on tourism who, his rallying cry was one more day. That we now have a lot of independent tourists and we're quite good at shaking them down for money. That is, independent tourists do spend a lot. And if, for example, we could have the cruise ship tourists spend one more day in Anchorage before they fly out, It would be a huge— or Juneau— it would be a huge multimillion-dollar increase in Alaska.

So if you think of things we could do to increase tourism, it doesn't necessarily mean we need more tourists. All the more tourists are good, but by allowing them to spend more money by our hiking trails, things of that nature, we get more money out of them, if you will.

Yeah, I appreciate that. So Veronica sent me a note. Do you guys have any information on the Rural Health Transformation Fund, and/or is it too early to tell at this point on what its economic impact might be? I saw the Department of Health announce their preliminary awardees yesterday. They'll be soliciting full proposals, I think, from 400 applicants.

Just to put RHTP or RHTF into context, you know, I mentioned that federal spending over the last 10 years has grown by approximately $9 billion.

RHTF would represent an increase in federal spending of $1 billion, right, over the next 5 years, or $250 million, or 2, uh, for over the next 4 years, $250 million a year for each of the next And so while RHTF is large numerically, it represents a relatively small portion of the growth that we've seen over the last 10 years. And, you know, RHTF was supposed to represent in some ways a bit of an offset from other reductions in spending that we would see coming from, um, uh, potential reductions in Medicaid beneficiary benefits. And so it's unclear how those, how those two components will net out yet.

Okay. I don't— Veronica says she has one last question. I don't see what she was asking. Um, I will—. I can just, I can just ask it if that's okay.

Yes, please go ahead. So, so Build Alaska's Future is a, is a nonprofit that's focused on trying to build a better understanding about the role of the federal government in our communities, trying to contextualize it and tell the story. We've had a challenge getting access to information in the last year and a half before it was a lot more accessible. I mean, we get it through anecdote. My question to you is, how is it going for you as economists?

Is it gotten— have you figured it out? Or, you know, obviously there's a change when there's a new administration, always. But we found this to be particularly challenging.

I agree. It has been challenging for us. So ISER receives a lot of federal grants. And contracts to conduct research, either from the National Science Foundation or the National Institutes of Health. It has been challenging to understand the status of those grants for which we are principal investigators on, right?

Grant recipients, right? This involves us talking to our program officers on the federal agency side, often through nonofficial channels, to be able to understand what the status of our funding is. And so for us to be able to replicate that exercise at scale for every grant and contract recipient across the state is an almost impossible task. I know, you know, some organizations have tried to do it for particular industries. I think McKinley Research Group has tried to understand the landscape of federal grants and contracts with respect to the construction industry via, you know, large-scale survey operations that they're trying to field by, you know, asking individual contract recipients Have you gotten your money yet?

Has there been a holdup? Has it been canceled? Has it been delayed?

That's a very difficult exercise to replicate at scale. And so, like I said, I think there have been pockets of efforts to try to understand it, but it would be a really valuable activity, I think, to try to undertake. Just, you know, what is—. Trying to understand what this landscape looks like has been challenging, and we're constantly having to wait. You know, I was presenting data from 2023 because that's sort of the latest data that we have available to us to see what actually got spent, right?

Because we just don't know what actually got spent last year. That was my— that was actually what I was pondering as you were presenting that, because when we met a year ago and planned on having follow-up forums after that, we were kind of— it was based on data coming in. And so we're still kind of in the same place, kind of. Okay. Yeah.

Apart from the very great numbers that Brock shared on the federal work. Workforce, right? We're now— we have now a pretty good picture of what the federal workforce was up to. But that's only one important but small component of aggregate federal spending in the state. And to contextualize the federal workforce numbers, I mean, that has been something that's been challenging itself to get, has only recently been accessible.

And so that, that just goes to say that it is a bit of a challenge and something— a big reason for why we haven't seen some of these numbers been readily available to be answered. We're still at a point where we're able to gather some of this information. And so this is just sort of an update of that information that we, you know, want to provide.

Well, seeing that there are no more questions, and honestly, this has been a fantastic discussion, and I appreciate all the information you've given us. So thank you, Brett. Thank you, Bob. Thank you, Brock. Once again, phenomenal job.

Also like to thank ISER and Build Alaska for co-hosting. Want to remind everyone that we will be putting this presentation up on the Commonwealth North YouTube page probably in a day or two. We'll also be sending out a full summary, and the economists will be sending me their slides, which will be included in the summary. So that you guys can refer to it later in your own presentations. So once again, I want to thank everyone, and I hope you guys have a great day.