Sales vary boroughwide

Kenai Peninsula's 3rd quarter economic figures are mixed bag

Posted: Monday, December 30, 2002

The latest figures show the economy of the Kenai Peninsula Borough was a mixed bag during the third quarter of 2002, which ended Sept. 30, according to the borough's latest quarterly report.

Published four times a year, the Quarterly Report of Key Economic Indicators produced by the Com-munity and Economic Devel-opment Division breaks down pertinent data into various categories -- geographic location, gains or losses by industry, and the like. It also lists such information as the value, volume and type of construction permits, employment figures and population.

'If I were mayor, I'd require building permits (in the unincorporated borough) and the reporting of nontaxable sales. That way we'd report a much better picture.'

--Jeanne Camp,

economic analyst

The third quarter report showed gross sales for the quarter were down boroughwide, falling by 4.8 percent from the third quarter of 2001. However, taxable sales increased 3.1 percent. In terms of dollars, third quarter gross sales fell from $621 million in 2001 to $591 million this year, while taxable sales grew from $233 million last year to $240 million in 2002.

Although gross and taxable sales trends diverged during the quarter, for the first three quarters of 2002, both figures increased.

Homer's gross sales jumped 12.9 percent during the quarter, as that city led all others in the category for the second quarter in a row, according to the division analysis. Soldotna, meanwhile, registered a 7.2-percent gross-sales increase in the third quarter.

The figures from those two cities offset double-digit gross-sales declines in Kenai (-14.1 percent), Seldovia (-17.6 percent) and Seward (-11.5 percent), the report said. Kenai and Seward, however, registered slight increases in taxable sales. In Seldovia, taxable sales fell for the quarter.

Areas outside the cities also showed a gross sales decline of 9 percent.

Jeanne Camp, economic analyst with the division and producer of the quarterly report, said Homer's increase in retail and services likely is the result of better tourism numbers, but until further statistics come in she couldn't tell for sure. Soldotna's increase, meanwhile, probably is the result of that community's diversified economy, Camp said.

She could not say why Kenai, Seward and Seldovia saw decreases in gross sales during the third quarter. However, Camp did point out the borough does not have access to certain figures that could paint a clearer picture.

"There is no incentive for reporting nontaxable sales," she said.

While the sales tax form includes lines for nontaxable sales, it is only the taxable sales that the borough most desires and for which it provides penalties when those figures are not provided.

"If I were mayor," Camp said, "I'd require building permits (in the unincorporated borough) and the reporting of nontaxable sales. That way we'd report a much better picture."

Unreported nontaxable sales represent a hidden economy, she said. How big?

"That's anybody's guess," she said.

The report also analyzed gross sales figures by sectors.

Showing a 5.5 percent gross sales increase, the services sector outperformed all others during the third quarter of this year. However, the wholesale sector did chalk up a 1.4 percent gain, and transportation, communications and public utilities -- which are lumped together under the heading TCPU -- showed gross sales were up .2 percent.

In analyzing boroughwide gross and taxable sales by industry and comparing them to the third quarter of 2001, the report indicated that for retail sales, the largest industry in the borough, gross sales in 2002 fell .2 percent. All other industries showed double-digit declines.

Finance, insurance and real estate, or FIRE, declined 10.4 percent; agriculture, forestry and fishing, or AFF, dropped 13 percent; and manufacturing sales were down 13.8 percent. Construction sales fell 18.2 percent, and gross sales in mining marked down 24.8 percent.

But while gross sales were down, for some industries taxable sales were up. Retail taxable sales grew 2.2 percent over the same period in 2001. The service sector showed a 3.7-percent increase. Modest gains also were recorded in construction, manufacturing and transportation, communications and public utilities.

Camp cautioned, however, that while it is encouraging to see taxable sales in retail and service showing good increases, it also likely means that's where the jobs are going. And that may mean that lower paying service and retail jobs are replacing higher-paying jobs in other sectors. Employment figures for the entire year, when available, may be more specific, Camp said.

The division analysis said the oil and gas industry was a bright spot owing to continued oil and gas exploration activities in Cook Inlet and the reevaluation of old finds because of new technology.

"With the change in administration, hope has been revitalized for building an Alaska gas pipeline and for streamlining the permitting process," the report said. "The Kenai-Kachemak gas pipeline is close to becoming a reality with permitting complete and work scheduled to begin this winter."

The pipeline is scheduled for completion in October 2, and gas should be flowing by January 2004.

In construction, some 125 permits were issued, up 33 percent over the third quarter of 2001. They were valued at $16.6 million, up by nearly 56 percent, the division said. Kenai was the building hot spot for the borough during the quarter, but year-to-date figures gave Seward the building-boom nod for the year through Sept. 30.

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