While the New West booms, Wyoming mines, drills ... and languishes

CASPER, Wyo. - In 1984 an ambitious young legislator from southwestern Wyoming made a startling statement. Ford Bussart was on everybody's short list as Democratic candidate for governor in 1986. The Democrats, though a distinct minority in Wyoming, had held the governorship for 12 years under Ed Herschler, and they saw Bussart as his likely natural successor.

But Bussart, who had risen to prominence as a corruption-fighting lawyer during the 1970s oil and gas boom, waved away what looked like a great opportunity.

"I don't want to preside over a wasteland," he said flatly.

Folks thought Bussart had exaggerated. Sure, the big boom was over, the price of oil had plunged and the uranium industry was on the verge of total collapse. But few in Wyoming thought things were that bad.

Bussart knew better. He said it would take "some pretty austere management and a willingness to talk about things such as tax increases" to tackle the coming 1980s bust. The odds were against that. Republicans controlled the Legislature and would be reluctant to impose new taxes. And nobody in Wyoming wanted to hear that times were going to get worse.

Bussart recognized something else: Calling Wyoming "The Cowboy State" was almost a joke. Wyoming was an industrial island locked in economically, politically and psychologically by the minerals industry and by the insular attitude of its citizens. Bussart believed that neither he nor anyone else could easily remake Wyoming into a state that could compete in the modern world.

Up and down and going nowhere

I'm third-generation Wyoming - my grandparents came here from Central Europe to labor as blacksmiths and miners. I have worked as a journalist, first in radio, and then for 20 years as a reporter out of Rock Springs and finally as an editor in Casper for the Casper Star-Tribune. So I've learned a fair amount about my home state: that its climate is harsh; that its immense prairie strikes many as just a long and boring expanse that must be crossed to reach the splendors of Yellowstone and Grand Teton national parks; and that its population is just 481,000, with the many small population centers separated from each other by mountain ranges.

The great thing about Wyoming, I tell outsiders, is that there aren't many people here. The bad thing, I quickly add, is that there aren't many people here. That's a schizophrenic view held not just by me but by many Wyomingites, and it is reflected in the state's promotional rhetoric: Wyoming is "God's country," a "great place to raise a family" and "like no place on earth."

If we really believed these slogans, and wanted to protect what we say we have, we probably wouldn't be promoting Wyoming. But it doesn't matter. We've been doing this kind of promotion for decades and it's yet to change the state's economic situation or help it escape from rural isolation.

In an ideal world, Wyomingites would come together to conquer our state's isolation. What happens instead is that we go out of state for what we can't find within it.

When I lived in Rock Springs, we went shopping and to the amusement parks in Salt Lake City. Those in Cody and Sheridan gravitate to Billings, Mont. And Laramie (where the university is located) and Cheyenne (the state capital) look south to Denver.

These cities do more than suck up Wyoming's retail and medical-care dollars. They colonize us culturally. We watch their TV; we listen to their radio and we read their daily newspapers. We go to them for good food and museums. And we root for their teams. I remember a Colorado friend telling me he had gone to a Denver Broncos football game on a weekend before an election - to find Wyoming politicians outside the stadium, pressing the flesh with their constituents.

I live in Casper, which might be called "Deep Wyoming." Because Casper is nearly in the center of this 98,000 square-mile state, it is more difficult for us to get to Salt Lake or Denver or even Billings. But at about 50,000 people, Casper is still not big enough to provide the amenities late-20th-century Americans expect.

It is true that Wyoming has been called a small town with a long main street, but that affectionate description implies cohesion and community. There's no center here, especially as the state has progressively weakened its public schools, its seven two-year colleges and its single university by starving them financially.

I hear, of course, howls of anguish from throughout the West, as places like Utah and Montana and Colorado and even Idaho experience the New West boom, and residents see the things they love about the West - quiet, few people, a rural feel - disappear.

I suppose I should be pleased to still live in a state with small towns and cities that aren't growing, and an economy based on mining and drilling. And if Wyoming had consciously chosen to remain in the Old West, I would at least respect the decision. But as a newsman, what really bothers me isn't so much that Wyoming is stuck, but that we seem unable to see ourselves straight. We in Wyoming still seem to run our public lives based on a series of myths. The biggest myth is contained in the state's official nickname, "The Cowboy State." The reality is that all of agriculture - cows, sheep, wheat, sugar beets and other crops - accounts for only about 2 percent of the state's economy. By comparison, tourism, concentrated mostly in and around Yellowstone, contributes 14 percent.

The second myth is that Wyoming is somehow more American than the rest of America; that it is "what America was" (another state slogan), when America was great. It's a wonderful myth, reinforced by the state's emptiness and unique landscape. Unfortunately, the main way Wyoming resembles the good old days is in serving as a colony that is run by the minerals and energy industries.

In the trona fields of southwest Wyoming, the Japanese dominate, with companies based in Australia, France, Korea and Belgium also holding big shares of the action. (Trona is nearly pure soda ash, used in making glass and detergents.)

In the Powder River Basin coalfields of northeast Wyoming, companies controlled by British interests own the biggest mines.

Finally, despite our gestures toward change, what Bussart knew 13 years ago holds today: Wyoming is locked in not just by foreign companies and their unholy alliance with our cowboy legislators; we are also pinned down by our hostility toward broad-based taxation, our hostility toward sacrificing during boom times so that we can diversify away from minerals and energy, and our hostility toward the new people and ideas we would have to welcome if we really wanted to embrace change.

States all around us, except for South Dakota and Nebraska, have managed to transform themselves, or have been changed from the outside. But here I watch our citizens accepting wages that average $85 per week less than the national average, and accepting for their children underfunded educations as well as a general lack of opportunity for all concerned.

Rather than choose Wyoming's way, many residents, especially the young, choose the highway.

A structural problem

Everything in Wyoming starts with the state's tax structure, under which minerals account for about 50 percent of all revenue.

The tax money is generated by a string of 17 coal strip mines in the Powder River Basin, world-class trona deposits in southwestern Wyoming, declining but still important oil production and, most recently, large-scale natural gas development in southwestern and central Wyoming. In addition, Wyoming has several very large coal-fired power plants - the Jim Bridger Plant near Rock Springs, the Dave Johnston plant at Glenrock and the Missouri Basin Power Project plant near Wheatland.

The fact that minerals pay a large chunk of the state's bills has given industry immense power, allowing it to build mines, mills, and power plants almost at will. The state also lets mining companies throw up communities from scratch, if there are none around, or turn existing towns upside down to house the needed work forces. This control has not gone unnoticed.

"We're not even of colonial status," says state Sen. Tom Kinnison, a Republican who recently saw the mineral lobby kill attempts to raise industry taxes for education. "I'm trying to think of the word to describe it. We have these multinational companies and the federal government owning Wyoming. We just pick up the pieces."

That can be expensive. There are busted mining towns scattered across the state, like Superior, Winton, Stansbury and Dines in southwest Wyoming. Superior was almost a city, with 5,000 people at its height. During the 1960s, when all the mines were closing, it was common to see entire houses pulled out of these towns and hauled into Rock Springs. Now there's nothing out at Dines and Stansbury except foundations. Maybe 400 people still live in Superior, amid abandoned houses. When the Union Pacific left, it sold the town the water system for $1; Superior then could get grant money to build a new water system. It's money some think could have been better spent elsewhere.

Boomtowns gone bust have a long history here. The town of Midwest, about 40 miles north of Casper, thrived in the 1920s and 1930s from the rich Salt Creek oil field, which also made Casper prosper. Midwest boasts of being the first place in the country to install lights for high school football games. But the oil boom went bust in Midwest by the 1960s, leaving the town with a deteriorated water system. To save the town, the state spent millions building a pipeline from Casper. Some argued at the time that it wasn't worth the money, and that the state should have pulled the plug on the town. But no one could do it.

Two recent developments drive home the depth of Wyoming's troubles. One is the state statistics that show how alone we are in the Intermountain West.

Idaho, Montana and Colorado boomed in the 1990s with 6 percent-plus job growth; Wyoming sputtered with 1.3 percent growth in jobs. We ran that far behind, even though energy in the 1990s came back from its 1980s depression. Even a new mini-boom in the oil and gas fields of southwestern Wyoming, and a huge new coal project planned in the Powder River Basin, don't offer a lot of hope for change in the state's economic status.

The second development reveals another aspect of Wyoming's singularity: In 1996, while newcomers were overwhelming neighboring Colorado and Utah and Montana, 1,000 people left Wyoming. State statisticians said they failed to find good-paying jobs, while those who stayed accepted an average weekly paycheck in 1995 of $350, compared to $435 nationally.

The news had one predictable result. Current Republican Gov. Jim Geringer and the Republican-controlled Legislature decided to give $40,000 (with another $40,000 pledged by private sources) to an Atlanta consultant to discover what kind of economic development Wyoming residents want and then draw up a plan to accomplish it. This search has been tried before by more committed and skilled governors than Geringer.

The governors

Wyoming's minerals and energy history started with the transcontinental railroad, whose route was drawn in the 1860s to reach coal in southwest Wyoming. At the same time, gold miners rushed to the South Pass area. Then, in the mid-1920s, the Salt Creek-Teapot Dome field near Casper began gushing millions of dollars' worth of oil. It and smaller discoveries kept the state going through the Great Depression.

During World War II, Wyoming coal production soared to power the nation's military machine. But Wyoming didn't get lasting benefit from the wartime manufacturing that occurred in other states. It got an iron-ore mine near Lander but not the steel mill it supplied, which went to Utah. It didn't get Los Alamos or Hanford or other defense facilities that anchored many Western states after World War II ended. (Perhaps as a result, in 1994, less than 5 percent of the state's jobs were in manufacturing, compared to about 16 percent nationwide.)

Wyoming's dependence on coal hurt the state in the 1950s, when railroads switched to diesel. At that time, in my hometown of Rock Springs, if you had a coal mining job, it was with the Union Pacific. It was the only economic game in what was essentially a company town. With the coming of diesel, the area plunged into a deep, long-lasting depression that prompted one writer to describe it at the time as "a Western outpost of Appalachia."

Stan Hathaway

Stan Hathaway gets the credit - and the blame - for helping to pull Wyoming out of that depression. Hathaway, a Republican, was first elected in 1966 and then re-elected in 1970, running on a pro-development platform. It was a time of crisis, much like today. Wyoming had only 332,416 people and ranked 49th in population among the states.

A Wall Street Journal reporter in 1969 described how Hathaway loaded up a plane with state officials and "Wyoming moose and elk steaks" and flew to Los Angeles and New York "courting industrialists." Economists at the University of Wyoming had been saying the state should be developing specialized products and putting more emphasis on manufacturing and non-energy-related companies, but Hathaway and his cohorts weren't listening. The state was pinning its hopes on oil and mineral activity, the Journal reported.

Almost as the article was being printed, Pacific Power and Light Co. and Idaho Power Co. were preparing to announce construction of the giant coal-fired Jim Bridger Power Plant near Rock Springs - Hathaway's industrial dream come true. Yet the city and state got more than they bargained for, thanks to the energy crisis of the 1970s, which spurred oil drilling and triggered a massive and memorable boom.

The double-digit growth turned Rock Springs, Gillette and Evanston upside down: Empty streets became jammed, the mental health caseload in Rock Springs jumped 900 percent in five years, and Gillette's rural fabric was torn apart by crime and social ills ranging from depression to divorce that collectively came to be known as "the Gillette Syndrome."

Classroom space was so tight in Gillette that some students attended classes in churches. In Rock Springs, drug use swelled, and prostitutes worked a lucrative construction-worker trade. The once-dormant town of Evanston hosted drilling rigs in city backyards, while trailer parks sprouted in vacant fields and lots.

Ed Herschler

As the boom gathered steam, residents feared that events were spiraling out of their control. The Democrats, always a minority in Wyoming, capitalized on those fears, and Ed Herschler was elected in 1974 to tame the boom Hathaway had worked so hard to create. Under the slogan, "growth on our terms," Herschler, the Democrats and moderate Republicans legislated Wyoming some control over the boom and also helped the state grab a share of the industrial profits.

The state in 1975 adopted a tough industrial siting act - systematically dismantled during the bust years of the late 1980s - and hiked mineral severance taxes, which were funneled into a Permanent Mineral Trust Fund. In 1996, that fund contained about $1.3 billion; its interest helps operate state government.

Herschler was to be re-elected to an unprecedented two more terms, despite a close call in 1979, when allegations of boom-related crime and high-level state corruption triggered investigations by a statewide grand jury. But he emerged unscathed. No indictments touched him personally and after Dan Rather and 60 Minutes left with a story on boom-driven crime, Herschler hung on, serving for 12 years until 1986.

His timing was perfect; he and the boom left at about the same time. Herschler may have seen the end coming, but he didn't have to deal with the consequences.

It is the perversity of mineral taxation that there's a lag time between when production begins and revenue starts to flow. Even after the Wyoming boom was well under way, the tax money wasn't there to pay for streets and classrooms.

Just as harmful, after a boom has gone bust, the taxes continue to flow, giving the cities, towns and state the illusion that the good times are still rolling. In the case of Herschler, he and the boom were gone for two years before the tax money stopped.

Mike Sullivan

It was Herschler's successor who had to deal with one of the deepest, longest extractive busts in the state's history. After Bussart decided not to seek the governorship, another Democrat, Mike Sullivan, an oil and gas attorney from Casper, ran and won.

He was to spend the next eight years proving that Bussart had been right, as the state staggered from economic crisis to economic crisis.

Only the occasional windfall or the discovery of stashed funds tucked away in state accounts saved Wyoming from big tax hikes and financial disaster. A new state accounting system yielded a bookkeeping surprise of $91 million one year and a coal royalty settlement brought in an unexpected $36 million in another. A $21 million inheritance tax payment from the estate of a Jackson woman helped make ends meet on yet another occasion. It's an indication of the small scale of Wyoming that the death of one person can balance the state's budget.

So both Sullivan and the rural-dominated Republican Legislature were listening in 1987, when "clean coal" sponsors came looking for a state handout. They convinced Sullivan and the legislators that the projects would create thousands of jobs if successful. But after millions were spent, it became clear that the new technology failed to live up to its advance. The clean coal program ultimately cost the state about $20 million.

There were other schemes. Promoters in central Wyoming's Fremont County, which withered when the bottom fell out of the uranium market, wanted to store spent nuclear-fuel rods in abandoned uranium-mine pits. The Wyoming Outdoor Council led the charge against that idea and helped push Sullivan to oppose it. Others suggested gutting regulatory and environmental standards. Sullivan resisted. In the end, his only successes were what he'd prevented from happening. "We could have gone over the hill and panicked," he said.

Jim Geringer

Wyoming didn't really blame Sullivan for failing to revive the state. He left almost as popular as he came in. But in the 1994 gubernatorial election, the state turned to aeronautical engineer and beet farmer Jim Geringer, a Republican, and his cures for what ailed us: an even freer hand for energy and minerals, and the lambasting of the federal government as the root cause of Wyoming's problems.

Geringer's first efforts to resuscitate the economy focused on getting increased revenues from energy and minerals without hiking taxes. That happened when the price of natural gas went up last winter, due largely, he acknowledged, to market demands. Geringer says the state helped by marketing gas as an "ally of industry."

Another priority of his administration was doing away with "burdensome regulation," the approach Sullivan fought. Geringer is so pro-minerals that he's sometimes viewed as anti-Wyoming. In 1997, the governor came under attack when he backed Exxon in a tax dispute with a county.

Geringer also became a general in the War on the West. He has close ties with Rep. Carolyn Paseneaux, the Wyoming point person for the "custom-and-culture" crowd, and with Jim Magagna, his state and federal lands "coordinator." Paseneaux, Magagna and Geringer want the feds to give greater weight to developing minerals on public land - which represents 48 percent of Wyoming - that they hope in turn will pump up the state's economy.

Meanwhile, the Wyoming Supreme Court has ruled that the state's unequal method of funding education is flawed. The lead attorney? None other than Ford Bussart, who is not unhappy he chose "social engineering through litigation rather than elective office." He says that the Legislature has neglected education, slashing the budget of the University of Wyoming during the bust years, and starving local schools as well. Teacher salaries plummeted during the 1980s, from sixth to 38th in the nation.

"We're not spending enough money to provide quality education to equip our kids to go out and compete on a global basis," Bussart says.

Always an obvious source of revenue, the minerals industry weighed in early. Corporations are already overtaxed, says Marion Loomis, director and lobbyist for the Wyoming Mining Association.

The minerals industry usually swamps any move to hike its taxes, thanks to its rural allies and its own massive lobbying power. Wyoming, incidentally, is the only state that has no lobbyist disclosure or conflict of interest laws.

So legislators dutifully looked elsewhere, talking about a state sales tax, since an income tax is banned by the state constitution. Last spring, a special session adjourned with no lasting infusion of money for education; legislators had to wind up their talks in a week because the state's stock growers needed their hotel rooms for their convention.

Bussart says he'll go back to the Wyoming Supreme Court to put the screws to the Legislature.

Trapped in a box

"We've got to dance with the one who brung us," is the way Geringer and other leaders describe the state's situation, and state leaders admit there is no independent way of knowing if industry is paying too much tax or how much it can afford. The way out of the box is tax reform, including corporate income taxes. Geringer has appointed a tax reform commission, but recommendations won't come until 1999, at the earliest (see page 14).

What lies ahead? The odds are good that it will be more of the same, dictated by the vagaries of oil, natural gas, coal and trona demand. The attitudes and power structure that have dominated the state for several decades remain intact.

Bussart believes education is the key to "digging ourselves out of the hole." Through education, he says, "you get creativity and diversity and there's no telling over the long term what kind of opportunities may come to Wyoming. But people aren't going to stay and try to create without an opportunity to be educated on a competitive level, and that isn't happening."

Why not?

"I had personally dismissed this for years. But now I believe there's a basic no-growth mentality that pervades our state," says Dick O'Gara, an economist at Laramie County Community College in Cheyenne. The people and companies who are here "have what they want and the hell with everybody else."

Frank Prevedel is a Rock Springs native and former legislator who has lived through "two booms, two busts and mini-booms in between." His coal-mining family settled in nearby Superior but left when the mines closed. He says: "When politicians talk about 'our way of life,' that's a code word for 'let's protect the status quo.' I think that permeates a great many of our most powerful people. Whose way of life? The big landowner? The mineral industry? It's the way of life that is not encumbered by new growth, maybe new problems and new ideas."

It's an odd coalition that keeps Wyoming as it is. The mineral companies don't want growth because they would have to pay for it. Their rural allies oppose growth because it means more people and change, which in turn would dilute rural influence. And they are particularly powerful in part because of the rhythm of their work. Ranchers can take off a few months in the winter, when the Legislature meets; schoolteachers, professors, miners and many professionals can't.

Sure, Wyoming is a "good place to raise a family." Crime is low. There is lots of outdoor recreation. But it has none of the things that would let Wyoming's children participate in the larger world: top-notch schools, a first-rate university, a choice of economic opportunities.

If nothing is done, and the workforce exodus that began this year continues, Wyoming will become more like the South Dakota of the Intermountain West, more habitable by bison than people. Perhaps Wyoming folks should just accept that that's the way it is and quit worrying about diversification and amenities.

Or, on second thought, Wyomingites can do what they've always done: sit back, depend on minerals and wait for another boom.

Note: the following sidebar articles accompany this feature story:

- Wyoming is "open for business"

- A Wyoming coal town comes of age

• Communities