Governor Mark Gordon on Wyoming’s Economy, Disconnect from Washington, and Cryptocurrency

Wyoming Governor Mark Gordon has dedicated his entire career to serving the state. Mark Gordon originally hails from Kaycee, Wyoming and he is a Middlebury College graduate. He is currently serving his second term as governor, securing reelection in 2022 with 79% of the vote, leading to the largest win in Wyoming history. He served as State Treasurer from 2012 to 2019. Chicago Policy Review’s Executive Editor for Policy Analysis Max Padilla conducted this interview on December 22, 2023. Read Part One of the interview here. In Part Two of this interview, Governor Gordon discusses Wyoming’s economy, a lack of understanding from Washington, and Cryptocurrency. This interview has been edited for length and clarity. Please note a staffer was also present during the interview and their contributions have been attributed to the Governor.

CPR: Wyoming sovereign wealth funds earned the #1 ranking for the United States, and #3 in the world for transparency from the Peterson Institute while you were serving as Treasurer. Since then, they have remained in the top five on that same list. Can you explain the significance of this for Wyoming?

Governor Gordon: It meant a lot to be on the list. One of the things that I really wanted to push was complete transparency. It is a public fund and because the people of Wyoming are the beneficiaries, I wanted to make sure they understood where their investments were being made and what the returns were. The performance of our office was a delight and unexpected. We wanted to make sure that people understood how the investments were being made because they have a piece of the action as far as how Wyoming invests. This is an evolution of the funds that preceded my time as Treasurer and then Treasurer Myers after me. We put this money into a successful, sophisticated modern portfolio.

During the 2008-2009 financial crisis, Wyoming fared well and ranked very high because we had very conservative investments. But it meant that when the market started to recover, we initially did not rank high. We now rank very high relative to other peer funds.

Being on that list has allowed me to go to things like the Milken Conference and to the International Sovereign Wealth Fund forum as a peer. It has allowed me to play a very large role in bringing Wyoming’s technology forward to a better world.

But things like grid infrastructure, grid renewal, airport reconfigurations and structure, roads, and railroads have a much longer private equity horizon. Sovereign wealth funds can be patient in their investments, so if responsibly managed, there is a real opportunity to play an outsized role in Wyoming’s development.

CPR: Critics have pointed to a catch 22 at the center of the state’s economic diversification efforts. As the state attempts to attract new industries and their workers, it worsens the already tenuous fiscal situation and might continue to do so unless the tax structure is diversified. However, its current tax structure is what draws those new industries into the state. Can you explain that dynamic? Do you think there is a need for tax structure diversification?

Governor Gordon: Wyoming does not have an income tax, which as a former governor says, makes us an exceptionally good place to preserve wealth. People move here once they have made their money somewhere else. Most of the wealth that is generated and stored in Jackson, Teton County is from people who have worked in San Francisco or New York. There is not a lot of local industry.

The tax structure you talked about has a secondary problem. What if we diversify the economy and bring new businesses in and they do not shoulder the load? The businesses that will come in bring families that are young or middle-aged and might have kids. Those kids might take part in state-provided education. The issue there is if you diversify and you have people that come in that benefit from the tax structure but do not participate in the tax structure, it is just additional costs and that quite frankly is the biggest bugaboo with our tax structure as it exists.

For a long time that structure was okay because minerals could shoulder the load incredibly well. Texas and Wyoming were quite similar back in the 1980’s when about 80% of our relative revenues came from mineral development. Texas has diversified remarkably and is only about 27% dependent on minerals. Wyoming still sits around 60%.

We have diversified but are looking to the future. There are tremendous federal incentives and a building bonanza in Wyoming to build renewables. We have talked a little bit about the footprint renewable energy brings and that renewables do not currently pay any significant tax. Our traditional revenue source – minerals – is under attack by the investment world and Washington. We are fighting back to make sure that people understand that we can do good things with our minerals. We understand that the renewable portfolio will need to play some role in providing the nation’s electricity. People who moved here to work with renewables tell us that if we change the current structure, they will not be here.

CPR: Is there room for any reform in the tax system without disincentivizing investments? And how would you create a booming economy while also maintaining a strong fiscal position?

Governor Gordon: That’s a matter of education. Wyoming was open during COVID. Many people saw us as a counterweight to overly aggressive states like California and Colorado. There was a lot of migration to Wyoming, mostly from people who came here for open spaces. They also came here due to the lack of income tax. Due to the way our constitution works, people were buying homes sight unseen. There was a significant appreciation in property values.

That brought about our thorniest issue. What will we do to give relief to people living on fixed income? Their property value has now gone up, not through any fault of their own, but because people moved in and bought houses at much higher prices. In the near term, we need to talk about relief. Part and parcel of a diversified economy, which is what we must do, is a robust and serious conversation about what can we do to make sure tax burden in Wyoming remains low but is diversified.

We also need to withstand the meaningful and harmful assaults from the federal government on Wyoming’s economy. Our government, both at the national and state levels, is divided into three independent branches with varying effectiveness right now. Congress is out to lunch and cannot do anything. The courts are jammed up and it takes a very long time to get any resolution.

The Biden administration knows this and acts with some impunity in driving an agenda that nobody can check them on. Why is that important? We have oil and gas leasing that is essential for the buildup and proper development. In 2020, the new administration said we are going to pause lease sales, which cannot be litigated. The Biden administration paused the required mandatory quarterly lease sales until they completed an assessment of what that leasing program looks like, which resulted in functionally no lease sales in Wyoming. Even when a sale was executed, the lease was not provided for development.

This drags over to other actions being taken by the same administration. We are also concerned about grizzly bear delisting in the Yellowstone ecosystem.

Grizzly bear delisting would allow Wyoming to manage the species, which has biologically recovered. Having authority to manage this species respects states’ rights, but also allows for local decisions regarding public safety. Moreover, grizzly delisting impacts the economy around agriculture and tourism in the management of the species, while ensuring it remains a healthy and recovered species.

We have attempted to delist it again over the past two years, but both times it has been put back to court action with pushback from the Biden administration. The law reads that in the first 90 days, the Fish and Wildlife Service is supposed to determine how they will proceed. That was two years ago. That 90-day interval has been ignored. We have that in front of the courts now.

It feels like it just drags on and on when the grizzlies were already delisted once under the Obama administration and once under the Trump administration. These actions have meaningful consequences for our economy.

CPR: In the past couple of years, the Cowboys state has started a campaign to become the nation’s most crypto friendly state. Wyoming has passed three dozen laws relating to cryptocurrency in some capacity. These laws helped attract crypto blockchain and Web3 employees. Despite Custodia’s success in their federal case back in June, the state has seen limited success. In fact, some have criticized Wyoming’s crypto-friendly aspirations as “colliding with economic reality.” Crypto has not significantly impacted the Wyoming economy. Why is that? What are your plans going forward, especially as you enter your last term as governor to ensure growth after your time is up?

Governor Gordon: Let me put this in a couple of different frames. First, we are building what we are calling a Wyoming stable token, which will be the first of its kind. It is regulated under Wyoming, and we hope we can lead in that space. There are two main exchanges at this point. Circle, which is domestic and Tether, which is international.

Washington is deliberately trying to regulate this for consumer protection. The Federal Reserve, FDIC, and other regulatory structures are also intent on narrowing the crypto and community banking spaces. The Federal Reserve and the FDIC are driving to bigger players like JP Morgan. The policies out of D.C. are limiting the kind of experimentation that Wyoming can partake in.

There’s resistance from the FDIC to allow banks to be an intermediary with crypto exchanges. They are using the excuse of Silicon Valley Bank as a reason this cannot happen. Despite the limits on our experimentation, Wyoming’s banking is open. We have what we call Special Purpose Depository Institutions or SPDIs designed to be transparent. We are working our way through regulatory structure. In talking with other governors, I have found that some people do not think a small state has the capacity to play in this field. Instead, they rely on these very big players that are systemically important or institutions that we “respect.” That has been tiresome.

CPR: Why does Wyoming want to become the most crypto friendly state?

Governor Gordon: It is a new economic sector. Wyoming can be very nimble; we have a small, well-organized government. The legislature and our regulatory structure can pivot and do things that it needs to. It is an opportunity to help diversify our economy with something that is going to grow substantially.

CPR: This summer, Microsoft discovered a Chinese Bitcoin mine less than a mile away from Warren Air Force Base (WAFB), in Cheyenne, the state’s capital. WAFB controls some of the United States’ nuclear missiles. Whether or not the mine was directly or indirectly controlled by the Chinese government, this is a huge national security concern. How are Wyoming legislators balancing the desire to support the state’s crypto aspirations with the need to ensure the national security of the United States?

Governor Gordon: There is a very particular concern about foreign investment in Wyoming and that becomes more acute when it gets close to Microsoft or any of the other data farms out there. In addition, Wyoming is home to the 90th missile wing. We are looking at the incident under regulatory scrutiny. It is a particularly thorny issue because the events occurred on private property. We need to be able to do the investigation and put buffers around particularly strategic assets like other states are doing. This is a countrywide conversation, but it is acute here in Wyoming. But we need to be able to do the investigation and go through the political process to create a good regulatory framework for the development of digital assets.

CPR: What else do you wish people knew or would be willing to learn from a policy standpoint about Wyoming?

Governor Gordon: Wyoming offers more access to government than any other state. I am always told “you just seem so easy to get to, to see, to talk to.” That does not mean we do not have security. But it does mean that I make myself available. That is true of all the constitutional officers and the legislature. We try to be very engaged and friendly. We can craft policy and legislation to meet needs better than most other states. We have a unique advantage with the development and expansion along the Front Range of the Rockies, and we need to make the best opportunities to attract families and businesses. I’ve mentioned this a lot, but the country seems to be forgetting its federal roots. It feels like it is starting to think “we’re going to drive policy from Washington from one agenda.” There are a lot of reasons that may be happening, but it is particularly frustrating for rural states. It sounds cliche, but Washington just does not understand what is going on here.

This concludes Part Two of this interview. Read Part One here.