An analysis of the latest economic figures confirms the negative impact the closure of the Big Kmart store last April has had on tax revenues in the city of Kenai, but that same analysis predicts the coming of Home Depot should return some of that revenue stream to city as well as borough coffers.
The latest Quarterly Report of Key Economic Indicators, which covers the third quarter of 2003, was published last month by the borough's Community and Economic Development Division. In it, analyst Jeanne Camp said Kenai experienced third-quarter drops in gross sales and taxable sales compared to the same period the previous year.
Over the first three quarters of 2003, "year-to-date" gross sales in Kenai fell about $3.6 million. Meanwhile, year-to-date taxable sales declined by nearly $10 million. Those losses were attributable largely to fall-offs in retail sales. Kmart represented a sizable chunk of retail sales in Kenai. The city has a 3 percent sales tax, meaning the $10 million taxable sales drop cost the city of Kenai about $300,000. The borough lost about $200,000, based on its 2 percent sales tax.
"The coming of Home Depot is certain to regain some of the market share for Kenai," Camp predicted. Home Depot opened its doors Dec. 17.
The Kenai numbers were part of a broader look at the economy of the Kenai Peninsula Borough and its cities. Third-quarter figures show gross sales jumped 2.9 percent over those of third-quarter 2002, rising from $595.6 million to $612.6 million. Taxable sales, however, fell .6 percent.
Other economic indicators showed third-quarter construction permit values decreased 33.5 percent from 2002 and permit volume was down 20 percent. Even with those summer declines, permit values and volumes over the course of the first three quarters of 2003 were above those of 2001, which was a very good year in the construction industry, Camp said.
It is generally considered a positive sign when jobs are added to the market at a pace equal to that of the increase in the labor pool. That is, when there are new jobs for each new person added to the labor force. That was the case in 2003. The labor force -- those available for work -- jumped 853 between September 2002 and September 2003, while the number of employed people rose 847 in the same period. In other words, just six more people were added to the labor pool than jobs added to the job market.
"That difference was enough to drop the unemployment rate from 10.8 percent in September 2002 to 10.5 percent in 2003. Unemployment typically rises in September after falling below 10 during the height of the tourist and fishing season.
The peninsula fishing season was deemed successful, Camp said, noting an abundant run of sockeye.
"Prices were not quite as high as fishers had hoped," she said. "The Kenai Wild sockeye salmon branding program experienced a second successful year as supply exceeded demand for high quality salmon."
"Mixed signals" continued to come from the oil and gas industry, Camp said. Unocal announced layoffs as they shut down the Baker platform, but other companies, such as Marathon Oil, announced tentative plans for increased exploration, production and development in 2004, she added. The industry focus has been centered lately on natural gas exploration.
"The Kenai Peninsula Borough economy is relatively stable," Camp said.
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