SHERIDAN — Wyoming has long debated how it could develop a more diversified economy that is not as vulnerable to the boom-and-bust cycles caused by fluctuations in the energies market. The two major party candidates for Wyoming’s next governor are long-time residents of the state who have closely monitored previous diversification efforts and are ready to propose their own solutions. State treasurer and Republican candidate Mark Gordon said he sees opportunities to diversify the state’s revenue by tweaking and building on the assets it already has. Democratic candidate Mary Throne, who previously served as the minority leader in the Wyoming House of Representatives, said the state’s boom-and-bust woes persist because lawmakers have been unwilling to develop solutions.

“The biggest barriers (to economic diversification) have been a lack of leadership and willingness to change how we do things,” Throne said.

One issue related to economic diversification that has come to the forefront is whether the state has a tax structure that can benefit from economic diversification, which the two candidates have approached differently.

The Legislature’s Joint Revenue Committee received a study conducted by the economic forecasting firm REMI that concluded that economic diversification could actually harm the state with Wyoming’s current tax structure, which generates about 70 percent of its revenues from the energy sector.

If companies from other sectors were to move to Wyoming, they would bring new workers to the state. That population growth would place an added strain on the state’s infrastructure, increase the use of state services and grow enrollment in state schools, which means the state would have to pay to expand those services.

But because the state’s tax structure is not equipped to collect revenue from the industries that would be triggering that growth, it would not have any way to offset the additional costs.

Throne said reforming the state’s tax structure is the most significant hurdle Wyoming will have to overcome in order to create a more diversified economy. Reform would likely mean either increasing taxes on businesses in industries outside the energy sector or creating new taxes on those industries.

“It’s just math,” Throne said. “It’s reality. And we don’t do our citizens any good if we don’t identify the real issues that we’re facing.”

In terms of specific taxes, though, Throne said the state would have a lot of options, and all of the state should evaluate which options would function best in Wyoming.

“We’re trying to build a tax structure for our economy of the future, not our economy of the past,” Throne said. “Energy, and mineral extraction, are going to continue to be our backbone for the considerable future, but it’s just not right to expect that one sector to pay all of our bills; it’s also not practical.”

Ensuring funding that will allow Wyoming services, such as public education, to continue to thrive, Throne said, also doubles as a way to guarantee that Wyoming is providing the infrastructure and amenities to make it attractive to new businesses.

Gordon, however, said the REMI study used hypothetical companies from several different industries to project the impact they would have on the state if the state subsidized them to come in. The model businesses the study used were large companies that would place a significant burden on the state due to their size, in addition to the subsidies the state would pay them.

“It is not clear to me that the same equation holds true if we do what I’m suggesting,” Gordon said.

Gordon’s approach to diversifying Wyoming’s economy would be twofold. He said he believes there are opportunities to diversify within the energy sector by placing more emphasis on processes that add value to minerals, similar to the activities of Atlas Carbon in Gillette, which uses activated carbons to make products used in air and water treatment systems, and to Ramaco’s proposed Sheridan County facility, which aims to use carbon resins to manufacture a wide range of products.

“In both of those cases, my view is those are helpful and I’d like to see us continue down that path,” Gordon said. “…There are all those sorts of things that can help add to our revenue stream by adding value to the products that we do tax.”

The second part of Gordon’s diversification plan is to encourage more entrepreneurship and small-business development. Those businesses, Gordon said, pay property taxes and sales taxes, among others, to the community in which they are located.

“If we put the pieces in place to make it so that Wyoming is an attractive place for small businesses to come locate and build, then we don’t have the same burdens,” Gordon said. “[Those businesses] pay their way a little better as they grow.”

He added that he has not dismissed the idea of creating new taxes to broaden Wyoming’s tax structure, but it is only something he would consider as a last resort.

Current Gov. Matt Mead created the Economically Needed Diversity Options for Wyoming initiative as a way to develop a long-term strategy for diversifying the state’s economy and the Legislature-allocated funding to create councils dedicated to exploring the priorities the initiative identified.

The state’s next governor will be in charge of continuing and growing Mead’s initiative, and both candidates are cautiously optimistic about ENDOW as a piece of the big-picture project.

Both Gordon and Throne highlighted improving infrastructure for services such as broadband as a priority for the state to attract new businesses. Much of the legislation related to ENDOW was aimed at developing that infrastructure as well, but Throne said she has seen past diversification efforts in the state make recommendations that were never implemented.

“I think ENDOW is a little too futuristic,” Throne said. “We need ENDOW now; there are things we need to be doing now.”

Gordon drew similar comparisons between ENDOW and previous diversification initiatives, such as the Wyoming Future’s Initiative in the 1980s. If elected, Gordon said he would use the recommendations of the various ENDOW-related councils as guides in developing his own path forward.

“I think ENDOW has done a lot to raise a number of questions and maybe some ideas which need to be worked on as we go forward,” Gordon said. “Is ENDOW the recipe? I don’t think so. Is it part of the ingredients? Probably so.”

The election for the state’s next governor will be held on Nov. 6. Early voting begins Sept. 21.