As head of the Rio Grande Foundation I often travel both within and outside of New Mexico. I recently traveled to Alaska for a meeting with Grover Norquist of Americans for Tax Reform and other leaders from across the nation. It was my first trip to the Final Frontier and (fortunately) it wasn’t ALL work.
That said, New Mexico and Alaska are similar in many ways (beautiful, reliant on oil/gas, tourism, currently saddled with high unemployment, and lots of federal lands). In fact, while New Mexico and West Virginia are 2nd-highest at 5.4% unemployment, Alaska’s rate remains stuck at 7.3%. What is wrong with Alaska and what “lessons” might be learned from talking to people with deep knowledge and understanding of Alaska and its economy:
1 While New Mexico is reliant on oil and gas, Alaska is even more reliant. Oil production is down in the State (see chart below) while it is up in New Mexico. This is a big reason why New Mexico’s economy has rebounded in recent years, but Alaska has remained stagnant (it also explains why New Mexico has surpassed Alaska in oil production).
2 The opening of a small part of Alaska’s National Wildlife Refuge in the federal tax reform that passed at the end of 2017 is expected to open up major new oil resources although it will take time due to the federal leasing process.
3 Like New Mexico, Alaska is a major tourism destination. However welcome, even people I spoke with in Alaska’s tourism industry understood that Alaska’s economic well-being depends on its natural resources.
Ultimately, while Alaskans already pay no income or sales taxes, its massive federal ownership and geography make true economic diversification a challenge. New Mexico has far greater capacity for diversification if it only improves upon some of its economic policies.