To survive the present, and thrive in coming years, Alaska must transition its economy — transition from a State which derives most of its capital by grasping at the export value of a single resource, oil, to one which generates wealth by applying enhanced human capital to add value in the development of all its resources. Successfully achieving this transition will require substantial and sustained investment in advanced education, in research and development — and in the institution of higher learning, the University of Alaska, which provides it.
Where do we find the revenue and/or savings to close the gap between $5 Billion in State spending and $1 Billion in State revenue? In the short run, we have three options and we need to use all three: reduce spending, broad based taxes and use of the Permanent Fund earnings. Yes, all options will have some negative impacts on Alaskans and our economy. Those impacts, however, are not as great as a failure to reach a sustainably balanced budget. Nor can they be allowed to keep Alaska from the ever-more clear need of bringing greater diversity to our economy.
The new Alaska economy, if it is to be a successful one, must utilize all Alaska’s resources, including oil, fish, minerals and timber, our scenic beauty and rich cultural fabric, strategic location and connectivity, and enhanced human capital, and be focused on creating jobs and expanded opportunity for Alaskans. The hallmark of this new economy must be talented Alaskans adding value to our resources, finding innovative ways to better meet our needs and exporting refined and finished products, not just exporting our raw resources. To accomplish this, Alaska will need, more than anything else, a highly trained and talented workforce, with the capacity to innovate and act on opportunities locally and globally.
An educated Alaskan populace, equipped to conceive, perform and utilize the ongoing arctic research that finds new, more affordable and more environmentally responsible ways to harvest and process our resources, will be a major foundation block of our new economy. In 1917, the founders of the University of Alaska (UA), wanting to expand Alaska’s agriculture and mining industries, sought to achieve that goal by providing education and research specific to those industries and their operations in an arctic environment. That mission, of educating our workforce and performing applied research, has continued for the past 100 years.
Today, thousands of Alaska’s political leaders, industrial leaders, educators, engineers, scientist and other valuable contributors to the Alaska workforce are proud graduates of the University of Alaska. University research has also made invaluable contributions to Alaska and Alaska’s economic growth. Some of the more recent research at our University includes working with the Alaska Department of Transportation (DOT) to mitigate dust on rural Alaska roads and runways, working with DOT to design a more flood resistant roadway to our Arctic oilfields, working with Alaska’s oil industry to design more effective Arctic oil spill mitigation technologies, working with the fishing industry to develop more energy efficient methods to process fish in Alaska, develop technologies that have reduced the high cost of energy in rural Alaska and helping the North Slope producers reduce their footprint on our Arctic environment. These examples represent just a very small percentage of the research at UA that has helped grow our economy, but the long term contribution of any one of these could easily justify Alaska’s contribution to research.
Developing our economy in Alaska has challenges: high energy costs, fragmented electric grid, harsh climate, end of supply lines, stranded resources, distributed population and limited road network, just to name a few. Let’s not further complicate our situations by slashing our investments in our human potential. The strongest economies around our nation and the world are characterized by strong investments in human resource development, not just resource extraction. The challenges of Alaska today can and will be overcome if we have the foresight to recognize that Alaska’s investment in education and research — increasing our own capacity to innovate and create — is an indispensable part of building a successful roadmap to a prosperous economic future. Measured and balanced budget cuts are necessary considering our current fiscal challenges, but slashing our University’s research and education funding is equivalent to cutting Alaska’s future.
Brian Holst is Executive Director of the Juneau Economic Development Council. Jim Dodson is President of the Fairbanks Economic Development Corporation.