After a historic downturn in revenue, the Wyoming legislature has started this year’s session with a number of concerns. They still have a $150 million shortfall in revenue to fund their current budget and K-12 education funding has a $400 million deficit and they have no money for school construction. While legislative committees have been focused on other issues, there will soon come a point where lawmakers need to figure out how to move forward.
Almost 20 years ago a group of legislators and revenue experts decided that the state needed to determine what services it wants and what it would cost to provide those services. Buffalo Representative Mike Madden remembers those discussions well and he says the problem is simple.
“We have built a paternalistic dependence on the mineral industry and when they have a hiccup we have trouble learning how to act.”
Which leads to extensive budget cuts and panicking. The state legislature is probably better prepared for this downturn due to the fact that it saved some of its surplus over the last 15 years. Currently the main legislative savings account is over a billion dollars.
But Madden is among those who would like a more stable source of revenue. But getting taxes passed is a tough gig. His committee will be looking at some moderate measures in coming weeks.
“There’s a couple cigarette tax bills that we’re looking, there’s even a liquor tax of all things, so there’s a couple of opportunities where we can do the right thing I think.”
But the only way to make up for the loss of energy revenue is to a major tax. Those tax hikes are typically dead on arrival. Senator Leland Christensen smiles when he thinks about conversations with constituents who want service after service.
“We don’t have enough money for all of that and the people of the state are going to be involved in that decision. Whether it is a tax increase, a sales tax, a property tax, or an income tax, people need to think hard when they say they want more or they want to maintain, because we have to balance our budget by constitution.”
In other words, Wyoming is not the federal government. That’s why so many state agencies saw budget cuts this year and why lawmakers are looking to cut funding from K-12 education.
The governor has proposed a long term plan to once and for all diversify the economy. House Floor Leader David Miller was not keen on that when the legislature kicked off two weeks ago.
“Diversifying the economy will not diversify the tax base. In fact every non-mineral job is a further drain on our limited revenues.”
That’s because many think Wyoming’s tax structure is screwed up. The minerals industry pays a lot in taxes, the rest of us don’t. So, when prices drop, so does Wyoming’s revenue. Laramie Senator Chris Rothfuss says that needs to change.
“Imagining a future where we have a diverse economy, what would we want that tax structure to actually look like if the economy were diversified? So we had an information technology sector, a biotechnology sector, robust manufacturing, and the minerals industry.”
As the state looks to diversify the economy, Rothfuss wants lawmakers to take time to change the tax structure.
“Look at what other states are doing, state’s that have diversified economies, what do their tax structures look like? How did they implement that? Are there ways that we can phase it in? Or provide that we don’t have redundant taxation so we are not penalizing people anew?”
A number of legislators are slowly coming around to that idea. Cheyenne Representative Dan Zwonitzer says they need a long term view.
And Zwonitzer says there is a lot of discussion about doing things differently.
“I think now with a new crop of legislators, we’re younger than ever in median age, the conversation really is back to the future. I know Speaker Harshman keeps emphasizing as a teacher and a coach that we gotta' look to the next generation, we got to keep our kids here and maybe that’s where it starts.”
Lawmakers are hoping to develop some solutions this summer with a number of public hearings. Senator Leland Christensen says that’s great, but some spending and revenue discussions need to begin now. He says the education funding crisis is real and they need to work quickly to solve it. But it needs to be done wisely too.
“I think we need to be aggressive and we need to take some action this year. We’re gonna have to define some steps. Are we going to solve the whole thing in one year? I kind of like that approach of where we take some significant steps and then we let it settle and see how fits, before we try to roll the dice and try and get it right in one big decision.”
Legislators will tell you that it’s difficult for elected officials to think beyond the next two years, but if they don’t, the boom bust cycle will continue