The catch-22 that's bankrupting Wyoming

There’s a long-recognized but often ignored catch-22 at the heart of Wyoming’s economic-diversification efforts: Unless we also diversify our tax structure, attracting new non-mineral industries and their workers would actually worsen the state’s already dire fiscal situation.

Now, the work-from-home movement spawned by the coronavirus pandemic is putting that once theoretical threat to the test.

First, a quick review of the fundamental challenge first described in this column in 2019. Analysts using a Regional Economic Model, Inc. model are able to plug in Wyoming’s unique economic parameters — such as tax rates, prevailing wages and the costs of public services — to determine the net fiscal result of economic growth within various industries. Specifically they modeled what would happen if Wyoming was able to expand its agricultural, food-manufacturing, chemical-manufacturing, public-utilities and minerals industries.

The results demonstrated that growth in any or all of the non-mineral sectors produced long-run fiscal deficits for the state. That is, the increased tax revenue generated by the new businesses and their employees fell far short of the increased cost associated with providing public services — e.g. schools, police protection, courts, road maintenance, sewers, department of health services etc. — to the new households and businesses.

Read more: https://www.wyofile.com/the-catch-22-thats-bankrupting-wyoming/