Diversifying Wyoming’s Economy Responsibly

by Wyoming Liberty Group Staff

The 2009 recession had a widespread negative impact on every state in the country. Much of the United States is still suffering from the recession now ten years removed, but there is increasing optimism around the country that recovery is occurring. President Trump boasted a 2.6% GDP growth rate for 2018, but not every state's economy has improved. Wyoming's economy is still stuck in 2009. Wyoming's GDP has yet to rebound to pre-recession levels (see graph). Many argue that this is due to Wyoming's dependence on the minerals industry and that the state must diversify its economy to recover.

The state government has put forth a variety of options to achieve diversification over the last decade. The Mead administration facilitated the creation of the ENDOW board to attempt to tackle this problem. Since its creation, however, ENDOW has only served as a vehicle for corporate subsidies. When ENDOW released its twenty-year plan last August, they highlighted areas were they believed the economy needed to improve. ENDOW's plan relies on the injection of public funds into private enterprise.

Wyoming does not need to resort to corporate welfare to attract new businesses. Wyoming's tax code is moderately friendly to business (at least currently), but the regulatory structure has room for improvement. The legislature should consider reforms to the regulatory code to entice new industries and make it easier to conduct business here. This action does not require picking winners and losers in business as the ENDOW board does. Diversification is not a simple task, but Wyoming should be wary of "quick-fix" solutions. Wyoming can and should work to be more business-friendly by reducing the regulatory burden across the board.

The ENDOW board has also suggested a "diversification" of Wyoming's tax base, which is a red flag for tax hikes. Wyoming's recession cannot be fixed through taxes. The Wyoming legislature considered a multitude of tax increases last session and is certain to consider more in the next session. If Wyoming wants to bring in new business, taxes should be left entirely off the table. Tax increases only destroy new opportunities for the state. Recently, Representative Burlingame implied that Wyoming's taxes have little to do with business interests in the state, but that could not be further from the truth. To suggest that businesses do not factor expenses and profit-margins in where they do business is not only short-sighted, but dangerous as well.

Wyoming's economy can diversify, but it needs to diversify correctly. It is essential to refrain from the temptations of cronyism. Tax increases and subsidies will never create a prosperous Wyoming. Real growth starts with the free market. The state is capable of real growth. Reduce the regulatory burden, reduce the size of government, stave off tax hikes, and trust the market to grow. This is the only way to heal Wyoming's economy.