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Alaska U.S. Rep. Don Young might not always get it right, but he is correct to criticize Alaska's failure to diversify its economy, leaving it heavily dependent on oil revenue.
Speaking Friday in Ketchikan, Young said not enough resources were invested to develop other industries inside the state, and touted the importance of economic development: “Can we develop more fisheries?" Young said. "Can we expand the tourism industry better? Can we in fact have a mineral industry in this state? Could we have a timber industry again? All these things could happen.”
We saw warning signs in the 1980s, when oil prices nose-dived thanks to production that out-paced demand. However, some 30 years later, the state's budget is still completely dependent on taxing oil production. The result? A budget deficit currently approaching $4 billion per year. Alaska had chest pains in the past, but did not go to the doctor. It now finds itself in more dire circumstances.
It's easy to oversimplify the situation. Investing in other industries isn't a cure-all that would have solved all Alaska's problems if it had been done with more gusto. Oil production has been a financial gift to the state for decades. It's not that Alaska shouldn't have leaned heavily on it; it's that Alaska is finding out the hard way what happens when all of your income, more or less, derives from one place.
In light of the catastrophic budget situation, Alaska Gov. Bill Walker is right to look at taxation options in addition to budget cuts. However, we'd like to point out that all of the industries Young mentioned above have strong Southeast Alaska roots. There are still opportunities to explore growth in other industries in addition to making sacrifices on taxes and budget spending.
As it is, there is some irony that Alaska, which prides itself on independence, is so co-dependent on the oil industry, and on the federal government. There is a reason Young speaks so wistfully of the halcyon days when earmarks could funnel federal funds with relative ease. We hope there will come a day when those earmarks aren't missed.