We rarely devote much attention to what happens in the largest state of the US. No, not Texas – Alaska, which is bigger, geographically, than the next three states combined (Texas, California and Montana). Separated from the mainland by Canada, Alaska is the biggest state yet has fewer inhabitants than the smallest (Rhode Island). This creates enormous challenges for governance, including in higher education. And Alaska governor Mike Dunleavy’s new budget will make these challenges far, far worse.

In a shocking example of political overreach, Dunleavy announced 182 line-item vetoes to his state’s 2020 budget last week. He thereby cut the budget proposed by the Alaska legislature by almost $410m in general funds. Almost one-third of the cuts will come from the University of Alaska system, which will see its budget cut by $130m – that’s a staggering 41% reduction of state funding to the university.

In a shocked response, the University of Alaska system’s president, James R Johnsen, said Dunleavy’s veto “will strike an institutional and reputational blow from which we may likely never recover”. Scott Downing, faculty senate leader at the University of Alaska Anchorage, told the Washington Post: “It’s going to be devastating. The effects on programs, on the students, on staff and faculty are just going to be – it’s kind of unthinkable.”

Dunleavy has defended his draconian budget cuts as a “policy choice” to increase the Permanent Fund dividend Alaskans receive each year – a major election promise he made during his campaign. While this might be good news for drug dealers – research shows a 14% increase in substance-abuse incidents the day after the annual payout – there is little evidence that the dividends actually boost the state economy. But the University of Alaska system does.

Economists have shown that investing in universities boosts the economy of countries and states. They found direct and indirect effects of higher education spending that led to a significant increase in GDP across time and space. From Ohio to West Virginia, public universities have added billions to the state economies. Alaska is no exception. As my colleague Marshall Shepherd noted, the University of Alaska system provided $714m (directly) and $402m (indirectly) to the statewide economy in 2012 alone.

Investing in higher education is also a matter of social justice. The cuts will undoubtedly hit the regional campuses the hardest. These campuses service rural populations, and often ethnic minorities. Alaska Natives constitute the majority of students in some of the regional campuses of the University of Alaska Fairbanks, such as Kuskokwim (70%) and Bristol Bay (62%). Many will be unable to attend university if their regional campus is closed (or certain programs are closed).

How many young Alaskans, if forced to leave the state to find (better) higher education elsewhere, will return to Alaska after finishing their degree?

But the impact goes well beyond regional economics and even the state of Alaska. The budget cuts would be a disaster for US climate research. The University of Alaska System is the primary academic institution for Arctic research in the US and “every climate change researcher, educator, scientist and student in the lower 48 whose work touches the American Arctic” relies on the center’s work, Victoria Herrmann, the president of the Arctic Institute, told Gizmodo. “If the UA [University of Alaska] is defunded at the current rate, Arctic research in every corner of America will suffer.” She added, lest we forget, that “what happens in the Arctic doesn’t stay in the Arctic”.

Bluntly stated, the idea of an annual payout is to bring people to Alaska and to keep them there. It is unclear whether it achieves that. What we do know is that the University of Alaska system retains many of the most mobile, higher-educated workers that the state economy depends on. Research has found that 68% of two-year graduates and 42% of four-year graduates remain in the state. How many young Alaskans, if forced to leave the state to find (better) higher education elsewhere, will return to Alaska after finishing their degree?

Dunleavy’s draconic budget will be devastating for the state of Alaska and will have negative consequences for the rest of the US and the world. It is up to the Alaska legislature to stand up to Dunleavy’s short-term opportunism and veto his budget.

Cas Mudde is a Guardian US columnist and the Stanley Wade Shelton UGAF professor in the School of Public and International Affairs at the University of Georgia