A little more than three years ago, the Wyoming Business Council rolled out an ambitious five-pronged strategy to increase the state’s gross domestic product over the ensuing decade, with plans to expand the state’s heavy industry, increase exports and foreign investment, grow small businesses, create a technology sector and bolster “quality communities.”
Something of a blueprint for Wyoming’s economy of the future, the plan sought to build on a decade of explosive GDP growth powered by the state’s energy sector, with the Wyoming Business Council hoping to capitalize on that success through a mix of ideas like increasing startup success and retention, expanding the state’s Main Street Program and constructing large-scale industrial parks around the state.
Since then, success has been varied. While the agency’s 2018 annual report boasted increased exports, higher wages, successfully recruited businesses and growing tourism tax revenues, Wyoming actually experienced decreases in property and sales tax collections, and the state’s advanced industries sector had actually declined. In Cheyenne, the Legislature grew increasingly skeptical of the Wyoming Business Council, passing accountability measures for the agency in its 2019 supplemental budget bill before they were vetoed by Gov. Mark Gordon.
It’s 2019 now, and the Business Council – after months of soul-searching – is trying something new, rolling out a fresh strategy, a new perspective and a different philosophy driving its efforts.
Approved last month, the new strategy is much slimmer than the last one, coming in at just under two pages long, with two fewer goals, a clearer mission and an entirely new approach to bolstering the state’s economy.
“What’s different about this strategy is this is more focused on economic diversification than economic development,” said Wyoming Business Council CEO Sean Reese. “I don’t feel like we as a state have really discussed the difference between those two ideas – they’re interrelated, but they are different approaches.”
What’s the difference?
For the past several years, the state has pursued a strategy of “economic development,” or developing prosperity by pursuing growth in a very broad way – stoking growth in pursuit of immediately visible successes, Reese said.
Economic diversification, meanwhile, is a much narrower subset of economic development, focused on the composition of the economy as it is and building on that to increase resilience and sustainability in order to not just collect those big wins, but to strengthen key sectors across the state to similar footing as industries like energy and tourism.
“We’ve traditionally operated under that broad mission of economic development,” Reese said. “It’s an important mission, and at the state and local levels, there’s been a lot of good movement on economic development. But – because it’s so broad – it tends to make us a mile wide and an inch deep, and doesn’t provide the same level of focus that we feel we need.”
While keeping those core industries at the forefront will very much continue to be a focus under its new strategy, the Wyoming Business Council is now looking for opportunities to “activate” a number of new sectors like health care, finance, research and advanced manufacturing to create more equitable development and investment in a greater array of communities.
New this year, Reese added, are the expectations – the delivery of results lawmakers pushed for in the 2019 legislative session.
“The local buy-in, the grassroots buy-in, is extremely important,” Reese said. “That’s what’s going to make these things successful. But what we haven’t necessarily had is what the state of Wyoming wants to get out of these investments.”
Making it all work
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A number of components of the old business council strategy remain: After a hiatus, the agency’s capital financing program, Kickstart Wyoming, will be returning this fall, and other services provided by the council will be left intact.
Long-term skeptics — particularly free-market groups like the Wyoming Liberty Group — have their reservations, particularly on the WBC’s remaining capital investment strategy. In a research paper published earlier this month, Wyoming Liberty Group policy analyst Austin Hein offered criticism of using economic stimulus strategies to pull Wyoming out of its current recession. He argues such an approach has little long-term benefit and ultimately, distorts the level of impact government spending actually has on the economy and makes meaningful scrutiny of the agency and its benefits a challenge.
Hein also said there’s a greater degree of risk in shying away from a free market system: namely, in the state investing in businesses that banks deem too risky to loan money to, necessitating the state’s stepping in to provide that type of capital.
“I’m going to be instantly skeptical of a bottom-up, top-down approach either way,” Hein said in an interview last week. “When you’re gambling with taxpayer dollars on businesses, that’s going to be a problem.”
The WBC, however, has acknowledged that it takes more than just money to facilitate sustainable economies. What was missing in their lending programs before, they say, was a sense of cohesion and communication, and any real method to ensure businesses spurred on by the council aren’t simply handed money and sent off to do the work themselves. Moving forward, the WBC will facilitate their growth by providing them with back-end services like legal help and industry advisers, and by furnishing connections with other businesses to build a statewide community to stoke partnerships over regions.
“When it comes to Kickstart, we’re trying to make it about more than just capital,” said Sarah Fitz-Gerald, the council’s chief strategy officer. “What we’ve seen as really successful applicants have had the advantage of going through education programs and mentor networks, but what we see missing is a connection statewide.”
This third prong – leverage – is a cost-effective solution to sustainable economic development that goes somewhere the agency’s lending couldn’t: actually giving start-ups the tools they need to succeed after they’ve started.
“The way I see this moving forward … where we’ve traditionally been driven by programs, I think now we’re going to be driven by what industry needs and become more of a service organization,” said Reese. “That can be pretty inexpensive. What this looks like for innovation and market development, technology and workforce, is largely going to need to be driven by industry.”
Ultimately, the success of the WBC’s new strategy relies on a number of different elements, much of which have already been outlined by the state’s economic strategy group, Endow. That mission includes everything from offering tools to empower communities to improve themselves to training communities to take full advantage of the tools once they have them, as well as succeeding at the state’s larger mission of attracting and retaining a skilled, young workforce.
Though the business council outlined a desire to put more of the state’s economic strategy into the hands of the market, free market proponents like Hein still see flaws in their strategy.
“In my opinion, WBC uses terms like ‘activate’ and ‘leverage’ as a way to create a degree of separation from the businesses to frame themselves as non-central planners, while still retaining the ability to take credit if there is any success in their strategy,” he wrote in an email. “WBC sets the goal to ‘drive innovation to create new markets for Wyoming,’ however that goal is problematic from the start. Markets innovate, governments do not. If a market does not exist in Wyoming, there are reasons for it — whether it be lack of capital, lack of profit incentive, barriers to entry, etc. When WBC invests in businesses, they gamble taxpayer dollars and pick winners and losers in the marketplace. Governments do not have a role in deciding what businesses are successful. That is a misuse of taxpayer dollars.”
The Business Council seems to have acknowledged the need for a more equitable means of spurring growth, if they intend to stoke that growth. Rather than trying to do it all, however, the Wyoming Business Council will now put its focus on giving communities the services and back-end support they need to truly – and sustainably – build their own future.
“The communities have become very reliant on the state,” Reese said. “We’ve been blessed with this Legislature and the minerals industry that have allowed us to have these sizable grant programs – and I hope they continue – but we’ve got to figure out a way to help communities be more sustainable. And that’s a heavy lift, looking at larger systems than one organization can accomplish.”