Budget Cuts Before Taxes

May 23, 2016

  

Wyoming's Legislature revenue committee.
Credit Bob Beck

Wyoming’s revenue picture is dire. Thanks to declining energy and sales tax revenue Governor Mead has already started cutting nearly 300 million dollars from the two-year budget that was approved by the legislature in March.

A week ago Mead told the University of Wyoming that it would have to cut 35 million dollars from its upcoming budget. The reason is state revenues are down 100 million dollars from where they thought they would be. Mead will be demanding similar cuts from across state government. But despite all the budget cutting, Mead is not that excited about raising taxes to address the shortfall. He recalls a conversation he had with legislators heading into the legislative session. 

“As you have the largest rainy day fund relative to you budget in the country and the 2nd or 3rd largest overall in terms of actual dollars. And your also gonna ask for more taxes, I don’t see that as doable for the taxpayers and as a taxpayer I don’t get that either.”

Mead said lawmakers need to spend their 1.5 billion dollar rainy day fund first and then the state can entertain taxes.

“We need to address a plan that makes sense in the use of the rainy day fund. We can’t just keep building that up and then say we have a budget crisis and then say we are gonna tax you. I just don’t think the citizens will accept that.”

Buck McVeigh of the Wyoming Taxpayers Association said it’s a problem of Wyoming relying too much on one industry. 

“We’ve become so dependent over the years on our mineral base and the implications of this downturn is that it’s not gonna end anytime soon. So I think these folks are faced with some real challenges here, what are some revenue options.”

McVeigh said the energy industry pays the bulk of taxes and it’s time that citizens pay for the services that they use. He adds that individuals in Wyoming have among the lowest tax burdens in the country. 

There's enough room in state government to make these cuts, don't kid yourself. There's a lot of efficiencies that we can realize in state government, we've run pretty fat, we've run pretty loose here for a long time, and there are a lot of places in state government where we can make cuts without affecting essential services.

That did not impress members of the legislature’s Joint Revenue Committee who looked at tax hikes at a meeting this month in Douglas. 

Education is facing a serious shortfall since a lot of the money that pays for education comes from coal and so lawmakers spent an entire day focused on that topic, but other than a possible increase in the wind tax, they didn’t do much. And on the second day, despite some moderate concern for funding local governments, committee members approved no bills.

Senator Cale Case of Lander seems to sum up the view of most on the committee when he says the state overspent during good financial times.

“I’m really focused on trying to figure out how we can bring the budget over the next four or five years way, way, way down. I mean severely down. We’ve been living beyond our means because it hasn’t been sustainable, so that’s really my focus.”

House Minority Leader Mary Throne of Cheyenne said the state actually does have revenue it could use without raising taxes, but they would need a legislative session to change the way they use some of the earnings from the permanent mineral trust fund. Throne’s proposal would be to put investment earnings into the state’s general fund. 

“If we set that up like it was originally intended to run like an endowment and guaranteed an income from that, you know we could have ballpark 300 million dollars more a biennium going into the general fund.”

Which is the same number the governor is trying to cut. Throne said that lawmakers took some of that money to pay for some construction projects that she contends are not needed right now. She adds that there's other sources of state income that could be used and of course there’s the legislative savings account.   

Speaker of the House Kermit Brown said they’ll consider some of those things if the bust lasts, but he argued that the state needs to be conservative with its spending first.

“There’s enough room in state government to make these cuts, don’t kid yourself. There’s a lot of efficiencies that we can realize in state government, we’ve run pretty fat, we’ve run pretty loose here for a long time, and there are a lot of places in state government where we can make cuts without affecting essential services. The things that are important to people will still be there.”

Look for this issue to be debated well into the future.