The importance of Wyoming's Permanent Mineral Trust Fund

Feb 15, 2013

Credit State Treasurer Mark Gordon from the State Treasurer website.

Frequently during the legislative session you will hear lawmakers refer to Wyoming’s Permanent Mineral Trust fund.  The fund was established in 1974 by then Governor Stan Hathaway and it is funded by a portion of severance taxes or taxes paid by the energy industry and occasional money deposited by the legislature. Income from the fund can be used to pay for government.   It has a market value of roughly 5.6 billion dollars.  It’s viewed as a key part of Wyoming’s funding future. Wyoming Public Radio’s Bob Beck reports.

BOB BECK:   Treasurer Mark Gordon says the Permanent Mineral Trust fund, or the PMTF as the cool kids call it, accounts for the second most significant source of revenue for the state, behind severance taxes.

MARK GORDON how to look:  What’s become clear to me in the last year several years, you’ve sort of have moved past the notion that this is a good savings plan for the state, to this is a significant revenue generator for the state, to this has a responsibility for the state’s future.

BECK:  House Majority Floor Leader Kermit Brown says legislators spend about 130 million dollars of income from the fund.  He says the PMTF is what makes it possible for the state to manage without an income tax…

KERMIT BROWN:  Take that 130 million dollars and divide it by the number of people who are working in the state and that would be the amount of the state income tax.  And I’ll tell you it would be a substantial number that our citizens would have to pay to have the goods and services and benefits right now without the income stream from that permanent mineral trust fund. 

BECK:  The way the fund grows, of course, is by putting money into it. 

Senate Appropriations Chairman Eli Bebout says lawmakers need to put even more money into the fund.

ELI BEBOUT: You know in the tough times we had in the 90’s that accounted for about 25% of our revenues for the general fund.  That’s gone down to as low as 15% in the last 4 or 5 years.  We need to get that back up to 25%.

BECK: Lawmakers have been doing that by dropping a few million dollars here and there into the fund, even in years when state agencies are facing budget cuts.    Senator Cale Case stresses that the reason you want to do that is because the fund may become critical in the future if revenue from the energy industry drops…

CALE CASE  the need:  How do we have future revenue in minerals?  Well you keep  supporting your permanent funds as long as you can, so when that crossover point occurs where current revenues are less than current needs, you can fall back on the earnings of the permanent mineral trust fund.  

BECK: But when budgets are tight, some say the legislature should put less money into the fund.   For instance, Governor Mead proposed taking some of the money that was to go into the PMTF and put it into a legislative reserve account where the money could be used more easily.   Senator Stan Cooper wanted to use some of that money for highways.  Floor Leader Kermit Brown says that type of conversation always picks up when budgets are tight.

BROWN:  They see a need, and they say there’s need there and there’s all this money.  And I can’t reconcile having all this money coexist with the needs.  Why aren’t the needs being addressed with that kind money. And it takes a longer view I think to understand and put those opposing views in perspective.

BECK:  Treasurer Mark Gordon says that long view is important.

GORDON long term:  If we are to sort of pull monies out of it and think that we have a rainy day, that will compromise our long term future. 

BECK:  While the PMTF has generated some significant revenue in recent years, lawmakers have been inclined to save a lot of that money for a rainy day instead of spending it.   But House Minority Floor Leader Mary Throne says that’s the wrong approach.  There is no way the state should be considering budget cuts when the PMTF  is generating millions of dollars.  She argues that revenues from the fund should be used…

MARY THRONE:  You can’t say we have to build up the permanent mineral trust fund so it generates revenue, and then once it generates revenue say, oh, we can’t use the revenue from the permanent mineral trust fund.

BECK:  Throne’s concern is that the legislature is putting a lot of  PMTF  revenue into legislative savings accounts, instead of using it for necessary projects and things such as state employee raises. 

BECK:   Senate Appropriations Chairman Eli Bebout says setting aside the revenue from the PMTF  is part of the package as lawmakers plan for a future where energy revenues could be a lot less.   He says they are being proactive with an eye to the future.  For Wyoming Public Radio, I’m Bob Beck in Cheyenne.