DES MOINES, Iowa - Rising energy costs have been cited as one factor pushing the nation toward recession, but those same increases are keeping some state economies strong.
Central states and those in the West with large stakes in oil, gas, minerals and corn - the main ingredient in ethanol - have avoided the economic downturn that threatens tax revenues elsewhere.
Wyoming, the nation's leading coal-producing state and No. 3 producer of natural gas, projects its energy production revenue will increase its primary savings fund to $4 billion by 2010, even as state government spending continues to rise.
Montana and New Mexico expect oil revenue to remain strong. In Alaska, oil and gas revenue could produce a $5 billion surplus over two years.
Ernest Goss, a professor of economics at Creighton University in Nebraska, said there's no doubt that some states with energy reserves will maintain robust economies.
"Not only are they weathering the recession, it just isn't hitting them," Goss said.
Many Midwestern states expect to ride out the economic slump without severely cutting spending. South Dakota, Nebraska, Kansas and Iowa are insulated somewhat from serious impact because farmers are on a spending spree, Goss said. They expect the ethanol boom, which has driven corn and soybean prices to record highs, is here to stay.
"This part of the country is weathering the recession much better and the reasons are the very good farm income, alternative energy production and finally the housing downturn has had not nearly the impact here," Goss said.
Similar trends are shielding some states in the South, including Mississippi, North Carolina and West Virginia, where state budgets are expected to have surpluses or at the least remain flat.
Posted in State-and-regional on Tuesday, March 18, 2008 12:00 am
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