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State budget should be based on cash on hand

Wyoming State Capitol Building

The Wyoming State Capitol, where state legislators will convene to begin the 2014 budget session on Monday, February 10.

State budget should be based on cash on hand

Guest column by Eric Barlow
— February 7, 2014
Eric Barlow

Rep. Eric Barlow (R-Gillette)

The Wyoming Legislature is convening to consider the State’s budget for the next two years. The Joint Appropriations Committee has completed their review of Governor Mead’s budget proposal and made adjustments they determined prudent. This process stands in stark contrast to the fiscal contortions played out in Washington recently, and the likelihood that more will ensue.

Now aside from what is likely our shared dismay with the genesis and impacts of the federal situation, are there lessons for Wyoming in the way Washington has handled their responsibilities? I believe there are and offer three proposals for your consideration.

First, Wyoming should only spend what it actually has. Presently our budgeting scheme is based on expected revenue — what we hope to collect before the bills come due. That may be the way I live, and so may other working folks, and it is certainly better than borrowing like the federal government is to meet its current obligations. However, Wyoming has the opportunity to budget based on monies already in the bank. There is currently one year’s worth of cash on hand. Using these monies in a “forward funding” manner will allow Wyoming to better control its budget in several ways.

First, we will only spend what there is. Period. Secondly, our reliance on revenue forecasts based largely on energy prices and production levels will be reduced. And finally, budget adjustments can be more clearly driven by policy priorities, not fiscal limitations or abundances, whether anticipated or not. To accomplish this we simply accumulate revenue on a calendar year basis and spend it the next fiscal year. As there is a legislative session in each intervening timeframe, this allows necessary adjustments to be made. Most importantly, our fiduciary responsibilities are then based on our bank balance, not the hope of collection.

Next, Wyoming needs to have a meaningful discussion about our relationship to federal programs and the dollars associated with them. They all have “strings” and we need robust means of ensuring their acceptance and utilization is consistent with Wyoming priorities, not someone else’s. For example, the federal government shutdown this past year resulted in several hundred furloughed “state” employees. This begs a fundamental question: if the work is important to us, should we be paying for it ourselves? This review is not a simple task as Wyoming receives a plethora of federal program monies, many which may be quite beneficial. However, a careful examination of the programs and funds associated with them is prudent and will help ensure our acceptance is informed and augments our priorities.

Finally, we need a general Wyoming emergency fund. In recent years, we have had several natural events which caused significant challenges and required considerable resources to address. Included were mudslides, flooding and wildfires, all of which necessitated the Governor scour through agencies to find funding to address real and immediate needs. This disrupts agencies, programs and impacts the services Wyoming citizens receive. This can be rectified with the establishment of a fund for use by the Governor to address significant public needs which cannot be addressed within the operational budget of the responsible agency. Rebuilding roads and bridges, or protecting lives and property are too crucial a government function to be based on the success of a scavenger hunt. Let’s set a block of monies aside and establish guidelines for their use, all the while hopeful we will not need it.

In conclusion, government does not “earn” what it receives, but rather it collects from the earnings of others for its purposes. Therefore, it should be held to the highest of standards. Wyoming is uniquely positioned to raise our own bar by spending only what we have on hand, scrutinizing our programmatic and fiscal relationship to the federal government and establishing an emergency fund. Each of these ideas can further solidify a more fiscally responsible and responsive Wyoming which is what we should expect from all levels of government. Let’s do Wyoming’s part.

— Eric Barlow (a Republican) is the House District 3 representative, covering areas of Campbell and Converse counties. He is a rancher and veterinarian who lives in Gillette.

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3 Responses to State budget should be based on cash on hand

  1. DeweyV February 8, 2014 at 11:32 am #

    Anybody care to postulate what the Wyoming state budget will look like when we no longer sell hundreds of millions of tons of coal ?

    I’ve been told by my legislator that about 65 percent of state revenues are from energy and minerals. Yet back in 1969, the Wyoming general fund was depleted down to less than $ 500. Not a typo…five hundred bucks in the bank. So Republican Guv Hathaway instigated mineral severance taxes ( a radical notion at the time ) and created the Permanent Mineral Trust Fund , a/k/a/ coffee can account.

    If Wyoming government had to exist and still serve its residents with essential state services, but without a lot of coal money and a little gas, oil, and trona on the side, we would be in a world of huge hurt. Wyoming has been blessed with a long boom in hydrocarbon energy to draw revenue from. But all of THAT is tapering off. Coal shipments are dropping rapidly; crude oil is not a cash cow ; everybody in every state has their own domestic natural gas these days thanks to the fracking boom so no longer needs Wyoming’s remote gas delivered. Uh – oh.

    Perhaps representative Barlow should focus his gaze on Wyoming without the luxury of hydrocarbon mineral and energy revenue. Will this state come out of denial when coal is no longer paying the bills and realize they will need to increase property taxes and sales tax just to provide basic state government services ? That day is coming.

  2. rbd February 8, 2014 at 8:01 am #

    While no big fan of government, asking any entity to spend over the next 12 months what they have in the bank is not good business. The entire idea of a budget is really a forecast of resources to be received and the plan on how to expend those resources. It is putting your resources to their more efficient and effective use. Does Rep Barlow run his business that way?

    I do believe an emergency fund is warranted and something the State should consider. Having lived through the busts, saving money for emergency situations is always a good idea.

  3. Graybull February 7, 2014 at 5:12 pm #

    VERY surprising to see this article. Not sure how the progressives that run this site have allowed it.

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