Amid crisis, pockets of prosperity
Some states with key resources enjoying booms
WASHINGTON - As the national economic meltdown takes its toll on local economies, some out-of-the-way states are enjoying unprecedented prosperity. Home prices in states like Wyoming, West Virginia, and North Dakota continue to rise, wages are growing and unemployment is at record lows.
While at least 23 states and the District of Columbia scramble to cut their spending, these states and others like them are enjoying economic boom times.
These geographically and socially disparate states share two key characteristics, analysts and officials said. They are isolated from major urban centers - and thus from the housing bust and loss of financial industry jobs that have hobbled other economies. And they benefit from an abundance of in-demand commodities such as coal, natural gas, and grain, whose prices remain at historically high levels despite recent drops sparked by fears of a global recession.
"The downturn in the economy has winners and losers," explained Scott Pattison, executive director of the National Association of State Budget Officers. "After 9/11, it was fairly uniform - everyone had a downturn. This time it's very different because of the high agriculture and energy prices," and because the deflating housing economy is a regional phenomenon.
Wyoming anticipates a $100 million budget surplus this year, and its economy has grown threefold since 2001. North Dakota has rising wages and an unemployment rate that is half the national average. And West Virginia's top budget official says the state's economy is better than at any time since it was founded in 1863.
"They may not be wealthy states, but they pretty much all have budget surpluses," allowing them to consider tax cuts or new spending, said Michael Bird, federal affairs counsel with the National Conference of State Legislatures.
Meanwhile, traditionally wealthy states are cutting back in the face of declining tax revenues and higher borrowing costs. Virginia's governor just ordered the layoffs of 570 state employees, and a Florida agency recently proposed selling the state's fleet of airplanes. California and Massachusetts have asked the federal government for unprecedented short-term loans that they normally would be able to secure from private markets.
These widespread hardships throw into sharp relief the relative prosperity of rural, commodity-rich states like Nebraska, Oklahoma, and Montana.
Mineral wealth does not guarantee economic strength, however. Colorado expects to take in 84 percent more in energy-extraction taxes this year than last, but faces a $99.4 million shortfall due to lower income and sales tax collections, according to Carol Hedges, senior policy analyst with the Colorado Fiscal Policy Institute.
Nor does isolation from the housing bubble guarantee fiscal fitness. Kansas has rising home prices and low foreclosure rates, but its first-quarter revenues are $19 million below projections.
But for many rural states with in-demand natural resources, the economic crisis in the rest of the nation has hardly cast a shadow.
"We're in a very strong position and it does feel very good," said Pam Sharp, director of North Dakota's Office of Management and Budget. She pointed to low foreclosure rates, wage growth and high demand for the state's farm and energy products.
Virgil Helton, West Virginia's revenue secretary, said, "We just haven't been exposed to what the Arizonas and the Californias and the Floridas have."
He said West Virginia has record-low unemployment and is poised to benefit from rising coal tax rates, which will adjust to reflect the current high prices as long-term contracts expire. Income tax collections are up, too, thanks to new and better-paying jobs in the state, which has long had one of the nation's poorest populations.
Wenlin Liu, senior economist with Wyoming's economic analysis division, said his state is especially strong, thanks to a government that derives two-thirds of its revenues from the energy industry. Wyoming's general fund has grown threefold this decade, Liu said, and home price appreciation there is second only to Oklahoma's.