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Will states find other revenue streams to weather the fossil fuel bust?

Gaping deficits wrought by tumbling fossil fuel prices are forcing states like Alaska and Wyoming to slash spending, but little is being done – at least for now – to address politically unpopular, longer-term questions about new revenue models that would lessen their dependence on boom-and-bust industries. 

This year severance tax revenue in Wyoming is projected to fall to about 70 percent of 2014 levels. In Alaska, a more-than $4 billion deficit has set in, just three years after a $13 billion budget surplus. Policymakers are considering minor tax increases on things like motor fuel and alcohol and a planned tax on newly legalized marijuana that would collect a relatively small amount. But there may be no lasting fix for Alaska and Wyoming unless broad-based, unpopular taxes are introduced to help diversify revenue. For years, Alaska’s oil production has been on a downward trend, and Wyoming coal output has fallen steadily this decade. Those declines raise troubling questions about the road ahead.

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High Country News