As with the country as a whole, Wyoming is in an economic downturn. The dual impacts of reduced productivity from COVID-19 and the broader decline of the fossil fuel markets have resulted in …
As with the country as a whole, Wyoming is in an economic downturn. The dual impacts of reduced productivity from COVID-19 and the broader decline of the fossil fuel markets have resulted in reductions in both our state revenue and our overall economy. Rather than dwelling on the state budget, I want to look instead at the broader issue of our state economy.
When elected officials begin working on economic issues, it is easy to lose sight of the real goal. Because our state budget issues loom so large, there is a tendency to focus on raising revenue for government while economic development falls by the wayside. This mindset is backward.
Rather than thinking about how to maximize tax revenue, our legislators’ focus should be on maximizing the prosperity of the general populace. A functioning government is absolutely necessary for a prosperous state, but it is only one part of the puzzle. We also must have a trained workforce, the lifestyle elements that make people want to stay here, and — perhaps most importantly — jobs available in diverse economic sectors.
Government certainly plays an important role in all of these areas, but it is again only one of several factors. When thinking about what government should do to encourage economic growth, it is important to remember that the government does not build the economy. Government merely sets the conditions by which the private sector grows.
A government can be as pro-business as it can be, but without private sector investment, no growth will occur. Thus, when the candidates or officials promise to use government to “grow the economy,” typically what they mean is that they intend to promote business-friendly policies that will encourage the private sector to act.
Wyoming has typically had a relatively “pro-business” policy attitude, but that has also largely been born out of a reliance on extraction industries as a source of state funds. Moving forward, we must be vigilant to ensure that our systemic problems with state revenues do not cause us to react in a way that discourages other business investment. Bad policies could cause a spiral whereby revenue losses cause government to enact policies that are bad for business, which results in further revenue losses, and so on.
Instead, our public officials should start with some common principles: business policies should treat businesses equitably, fairly and with an eye toward encouraging investment in Wyoming. In saying that the government should treat businesses equitably, I mean that the government should not be treating similar businesses differently based on arbitrary distinctions. Government should not be “picking winners and losers,” even though our past policies have often tried to do just that.
Wyoming has long tried to push its tax burden onto out-of-state entities. In recent years, this has manifested itself in proposals for a corporate income tax on companies that exceeded a certain number of shareholders. This was a transparent attempt to tax out-of-state companies while not taxing Wyoming-based companies. In addition to likely being unconstitutional, it is bad policy because it does not treat businesses equitably. Investors are not going to choose Wyoming if they know that they will be put at a disadvantage for reasons unrelated to their business performance. Similar businesses should be treated the same if we want people to invest in Wyoming.
Treating our businesses fairly means that our officials should enact policies that treat businesses as a key part of our communities, with the rights and responsibilities that come with that role. Businesses should be viewed as partners in developing Wyoming’s future, as businesses are often the primary driving force in determine how our communities develop and who resides in them. At the same time, state officials should also treat businesses fairly in expecting them to act as responsible community members.
Lastly, encouraging investment in Wyoming means that our officials should continue the business-friendly policies that already exist — such as low taxes — and should work to eliminate other barriers to investment. Some progress has already been made to streamline permitting processes. This should be continued. Our legislature should also eliminate protectionist policies that benefit certain existing businesses to the exclusion of new competition. We are at a key point in our state’s future, and our legislature should take the steps now to encourage businesses of all sorts to locate here.
As we look to the next phase of our future, it is imperative that Wyoming develop its economy and adapt to new realities and challenges. The current economic downturn provides us with the opportunity to try new things, take new steps and hopefully chart a new, more prosperous course for the future. This will only happen if our state focuses on the real issue: encouraging a thriving community, rather than focusing solely on a thriving government sector.
(Khale J. Lenhart is a partner at the law firm Hirst Applegate in Cheyenne, where he has practiced since 2011. He is a former chairman of the Laramie County Republican Party.)