Last in the nation – that’s not a good place to be.

But that’s exactly where Wyoming finds itself ranked in a recent analysis of state economies. The ranking, compiled by Bloomberg, indicated that Wyoming has two main obstacles: its heavy reliance on energy and its demographic challenges.

It’s hardly a secret that on balance the state depends too much on revenue from energy production. In fact, it has become painfully apparent recently with the revelation that Wyoming faces a $156 million shortfall in the current two-year, $3 billion budget cycle. Most of the money that fuels state spending comes from coal, oil and natural gas. That’s how the state’s tax system is structured – to capitalize on the drilling and digging that takes place on Wyoming land.

But that doesn’t make sense anymore. Markets in the nation and the world are evolving – possibly permanently. The best-case projections say that under the right circumstances, Powder River Basin coal could hit recent highs by 2030. Beyond that, though, energy experts say, the sector will likely see a decline – regardless of whether policies such as the Obama-era Clean Power Plan are implemented. That’s because it faces pressure from cheap natural gas, which also teams well with renewable resources in a varied low-emissions energy portfolio.

Given that outlook, it doesn’t make sense to plan Wyoming’s financial future on an industry that has plenty of its own obstacles to navigate. The state must diversify its economy. It must work to welcome different types of industries, from data centers to manufacturing hubs to health care. But simply attracting them to Wyoming won’t be enough. The state must also restyle its tax structure to rely more equally on all industries, funneling that money to schools, public safety and other important areas. Otherwise, the expenses associated with any economic development costs more than the revenue generated by associated taxes on any new business. Only by reforming Wyoming’s tax structure can the state truly foster and reap the benefits of a diverse economy.

In terms of demographics, Wyoming will always be unique. Its low population and vast landscapes are important to the people who call the state home. But that low population density is also limiting Wyoming’s growth and prosperity. Companies looking to relocate here need stable workforces – a large pool of talent from which to draw. Wyomingites are skilled and hardworking, but as the Bloomberg rankings point out, the state has no metropolitan hub to serve as a base for a company.

In fact, that situation is worsening. The number of people who lived here dropped in 2016 for the first time in 30 years. Wyoming residents need jobs and they need well-funded state services – and if they can’t find them, they’ll look to make their homes elsewhere. But encouraging those things takes work and tax-supported infrastructure. To help create jobs, the state must position itself to support corporate economic development, and this means reforming Wyoming’s tax structure.

If the state really wants to diversify its economy – if it really wants to grow into a place where all kinds of people and businesses can thrive and power its economy in the coming generations – it’s time to start thinking about how the state can attract strong workforces and corporate citizens as it balances the need to maintain its way of life. It won’t be easy, but it must be done – and done soon – to preserve Wyoming’s financial future.

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