Monday, August 23, 2010

Stimulus funding and "rural" states--with a focus on Alaska

A front-page story in the New York Times a few days ago was headlined "Leery of Washington, Alaska Feasts on Its Dollars." In it, Michael Powell includes some recent statistics on Alaskan pork--a phenomenon with which the state's residents seem to have a love-hate relationship. Alaska's share of federal spending is 71% higher than the national average, up from 38% above the national average in 1996. Powell acknowledges that "[s]ome of this owes to the expense of serving Alaska’s rural reaches." He continues, however, that "much is bred in the bone. The federal government carved this young state out of the northern wilderness, and officials here learn to manipulate federal budget levers at a tender age." Tony Knowles, a Democrat who became governor of the state in 1994, is depicted as "understand[ing] the frustration that comes with bumping into federal officials at each turn. But the trade-off is not so terrible, he notes, such as having the feds pay to put broadband in Alaskan villages."

Prof. Scott Goldsmith of the University of Alaska picks up on another rural theme: the extraction based economy. He is quoted:

Californians wait for a new entrepreneurial wave to lift them. For us, the traditional extraction economy still rules. ... [H]istorically, we take whatever largess comes our way. A federal dollar is a good dollar.
The story also includes a chart showing which states are benefiting most, on a per capita basis, from stimulus spending. In light of the challenge sparsely populated states experience in achieving economies of scale to provide services, it isn't all that surprising that many at the top of the list are rural: South Dakota, Montana, Vermont, North Dakota, New Mexico, Wyoming, Idaho ... But that is per capita spending. Keep in mind that, in sheer dollars, what these states get in comparison to their more metropolitan counterparts is the proverbial drop in the bucket.

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