On April 18, the University of Wyoming American Heritage Center and Laramie County Community College in Cheyenne teamed up to sponsor a panel discussion on the economic and fiscal future of the state. They assembled a panel of six individuals with varying backgrounds to provide perspectives on this subject. Moderator of the discussion was Pete Simpson, somewhat of a Wyoming institution himself who served in the Legislature several decades ago. He began the discussion with a historic synopsis of efforts dealing with revenue volatility – reaching back into the early 1980s. The program to solve this problem at that time was known as the Wyoming Futures Project. When the price of minerals went up in the mid ‘80s, interest in this program went away.
Selecting me as one of the six panelists was no doubt due to my legislative experience and more specifically my position as chairman of the House Revenue Committee over the past seven years. Although I have been a panel member several times over the years, this was the first for which there were six of us rather than three or four.
Other members consisted of three current legislators, the former executive director of the ENDOW program, Jeremiah Reiman, and Sam Western, author and economist. Western wrote the book “Pushed Off the Mountain, Sold Down the River: Wyoming’s Search for Its Soul” in 2002. In short, Western’s book highlights the rugged individualism of Wyoming natives and their historic fixation on single industries to support their public needs.
A quote from a speech delivered a year or so ago by University of Wyoming Economist Anne Alexander provided the central focus of the discussion, which said in regard to Wyoming’s economic situation, “It’s not going to get better unless we make it better. ... There’s no cavalry on the way. We’re the cavalry.”
The discussion quickly centered on the difference between the past economic busts and booms and the likely difference in the state’s future business cycles. When minerals do well, Wyoming does well, if minerals falter so does Wyoming. The past five decades have witnessed several economic busts, all related to the volatility of the mineral industry. Economic recoveries in Wyoming have always depended on oil, natural gas and coal. They were the cavalry!
Panelists all pointed to the fact that coal, one of the legs on the mineral revenue stool, is certain to rapidly diminish in fiscal and economic significance to the state. In fact, coal delivered to electric utilities is predicted to drop to around 150 million tons within 10 years as generating facilities are decommissioned. That compares to more than 400 million tons during the heyday years of thermal coal. Just last week, Rocky Mountain Power hinted strongly that their power generating facilities from coal located here in Wyoming are likely to be shut down within the next four years.
Additional discussion was focused on the reality that any attempt to diversify the Wyoming economy without similarly diversifying state revenue flows is sure to be met with failure. Wyoming citizens all know that the mineral industry directly and indirectly pays 60 to 70% of the costs of public services such as education, health and virtually all other government services. Prospective new businesses outside of Wyoming know this also.
One panelist pointed out that the high reliance on mineral revenues creates an aurora of uncertainty in being able to provide essential services without coal and other minerals. This uncertainty has now grown in connection with news related to coal. An audience member pointed out that low taxes are far less important than certainty in the future. In other words, many business prospects are not willing to locate in Wyoming for fear that the state will not be able to function without all three major minerals. The current heavy reliance on mineral revenue thus serves as an impediment to economic diversification in the opinion of many panelists because they don’t know what to expect in the way of government services or sudden new taxes.
A brief exchange also took place among the panel as to whether there is a firm consensus among the Wyoming populace as to whether economic expansion into new areas is in fact a desired goal for the state. We hear of public concern about exporting young people from Wyoming and the need to provide opportunity for high school and college graduates. However, it is not difficult to find a large number of people with an opposite opinion that Wyoming just needs to stay like Wyoming has always been and resist adoption of the same growth mentality as neighboring states have done.
Panelists who are also presently in the Legislature also discussed the difficulty in even making small additions to the state revenue stream. Although Wyoming citizens are inured to preferring taxes that are paid by non-residents as is the case with mineral taxes, the 2019 General Session failed to pass any tax related bills, which would likewise largely be paid by non-residents. Examples include the tourism tax and a tax on income generated in Wyoming by large out-of-state retail corporations.
As the panel discussion closed, it was apparent that more time was spent on describing obstacles to economic and fiscal diversification than to specific strategies to alleviate serious economic and fiscal problems that are becoming ever more pressing. Western pointed out that since Wyoming has been living primarily on mineral revenue rather than traditional taxes for multiple generations, changing from that narrative is going to be difficult. As one of the panelists said toward the conclusion of the evening, we are running out of road to continue kicking the can.
Organizers of this event intimated that this panel discussion may only be the first of many similar panels that will be held throughout the state – all with the same basic theme. That is, how do we improve the long-term economic prospects of Wyoming as it copes with national and international changes in energy priorities?