Six of the country’s major energy-producing states have slipped into recession after a sharp decline in production and exploration over the last 18 months caused their tax revenue to plummet and job growth to stagnate, according to a financial analysis released Tuesday.
Alaska, Louisiana, New Mexico, North Dakota, Oklahoma and Wyoming each saw negative growth during the most recent fiscal year, according to the report from S&P Global Ratings.
“Initially, the downturn was felt in state finances,” S&P analyst Gabe Petek said. “Now this has really spread throughout their economies and highlights the risk of a concentrated economic base.”
Alaska, which has relied heavily over the years on oil revenue to fund state government, has burned through nearly $13 billion in savings over the last four years to deal with the price declines in the energy sector.
The state has closed job and public health centers, inspections of restaurants in rural areas have been done only as time permits, state prosecutors have been focused on only the most serious offenses, and the state transportation department has cut back on equipment operators. The state has cut jobs, furloughed workers and is selling search-and-rescue aircraft and ferries.