Sometimes Wyoming needs to spend rather than save
— February 10, 2014
It’s time for Wyoming lawmakers to have their annual debate about savings vs. spending.
Conservative Republicans always win this discussion, but the need for Wyoming to invest in its infrastructure and its people is stronger than ever after recent cuts to state and federal programs have gone into effect. Instead of socking away every dime, it’s time to evaluate and prioritize which state efforts need to be started or revitalized.
The state is fortunate to be able to craft its 2015-16 biennial budget with enough available revenues to avoid the rancorous debates of past sessions, when its fiscal fortunes were tight and the business at hand was to decide how much we could afford to cut agency budgets and still provide essential services. Last winter, staring at lower revenue projections from taxes on mineral production, the Legislature cut state agencies by $60 million, an average of more than 6 percent.
Thanks largely to record capital gains and better than expected tax collections, the governor was able to leave the Joint Appropriations Committee an estimated surplus of $238 million after he presented his budget recommendations. Mead cautioned we shouldn’t “spend like there’s no tomorrow,” and that’s something everyone should agree with whether they are conservative, progressive or somewhere in the middle.
Still, expect the GOP leadership’s standard argument that even more than the 2.5 percent of mineral severance taxes constitutionally and statutorily mandated to flow automatically into the Permanent Minerals Trust Fund (PMTF) should be put into the account. Obviously that strategy increases our investment portfolio and, in good times, creates more money that can be put in the General Fund for the state’s operating expenses.
But monies designated to the PMTF can never be used for anything else, no matter what fiscal circumstances Wyoming will face in the future. Last year the Legislature rejected Mead’s push to instead direct savings into the Legislative Stabilization Reserve Account (LSRA), better known as the state’s “rainy day” fund. In his 2015-16 biennial budget, the governor didn’t bother to make the case again, even though it’s a valid one: The state should have ready access to additional funds in case of an emergency.
The rainy day account has about $1.7 billion, and I seriously doubt conservative Republicans in the Legislature will ever reach consensus about what actually constitutes a rainy day and spend the money. With the PMTF containing about $6.5 billion and its guaranteed growth, though, it makes more sense to put any additional savings into the LSRA, where it can at least conceivably be accessed in bleaker times.
But the other consideration lawmakers must address is what programs are worthy of increased spending, now that we have some money available to undo any harm that came from budget cuts or less-than-desirable fiscal realities in past years.
Mead has indicated pay raises for state employees should be a priority, because most haven’t seen an ongoing raise since 2009. This will mark the first time since then that the Legislature will look at salary increases for the executive branch as a whole. Some workers did get raises within agencies, but those were select cases. Others received the 1 percent merit pay last year, but that was a one-time action.
While some critics have charged the governor’s request is merely election-year pandering, such increases are necessary if the state is going to be competitive in recruiting and retaining the best employees. The proposed raises won’t be across-the-board, but instead allocated based on how far below market an employee is, and workers’ evaluations.
As WyoFile reporter Greg Nickerson noted in a recent article, the state of Wyoming’s stagnant wages have led to workers seeking employment outside state government. In 2012, the most recent year for which data was available, about 1,273 employees either changed positions within state government or left the public payroll.
That high turnover rate is incredibly costly to the state. The 2012 Wyoming Workforce Report estimated that it cost about $23.7 million a year due to lost value in employee training and the expense of hiring new workers.
Nickerson also reported that 90 faculty members have left the University of Wyoming since 2009, the last major pay raise at the institution. Many UW professors took a total of $20 million in research grants with them when they went to other universities, but UW officials point out that due to a multiplier effect, the loss is actually about $100 million.
While there should be no question adequate raises for state employees can save the state money and improve the quality of the workforce, that’s not the direction the JAC appears to be heading. Mead recommended 2.5 percent increases for executive branch and UW employees in fiscal years 2015 and 2016, but members of the JAC recently pared the request to only 2 percent merit-based raises. They cut the governor’s request for $49.9 million to about $39 million.
Was it really necessary to reduce the proposed raise in this category by nearly $10 million, when there is a surplus of $238 million on the table, and salaries haven’t been increased in four years – during which time the state has also lost ground on market pay? It largely depends on what legislators do with that $10 million and other funds gained by reducing the proposed biennial budget. Do they plan to divert it to other needed areas, or simply stash it in the PMTF?
There are many social services cut in recent years that offer vital programs for the public’s health and safety, yet agencies have no way to make up those losses unless the state restores the funding. Take, for example, the state’s mental health services budget, which lost a total of $8 million and had to cut beneficial programs.
Few if any state lawmakers would argue that mental health programs are wasting money, or suggest the help they provide for some of the most vulnerable people in the state isn’t valuable. It’s also been well-established that if lack of professional mental health care forces this population to be left untreated, many will wind up homeless and in need of other social services that are far more costly. So in times of surplus budgets and steady revenue projections, why not restore the money necessary to treat mental illnesses on the front end, instead of ignoring their plight and putting them further at risk?
The state of Wyoming should also invest as much as possible in its infrastructure when times are good, rather than allow buildings, schools, bridges and roads to further deteriorate and increase the sum that will eventually be needed to fix them. Putting money into infrastructure not only protects the investments we’ve already made, but it could boost areas of our state’s economy that are continuing to struggle.
The governors’ recommendation to spend money to renovate the Capitol Building – which has been delayed for several sessions — makes sense, especially since the account already contains $103 million for the project. Mead noted he purposely left money in the budget so legislators can decide how much to spend renovating this iconic building. Many other worthwhile capital construction projects made the governor’s approved list, including at UW and the state’s community colleges.
But given the huge projected cost of fixing the state’s highway system over the next decade, it seems extremely short-sighted Mead rejected the Wyoming Department of Transportation’s (WyDOT) $50 million General Fund exception request in favor of other capital construction projects. While it’s true that the Legislature’s passage of a 10-cent per gallon fuel tax hike last year will help WyDOT start catching up with its overwhelming backlog of road repairs and construction, the decrease in available federal highway funds that largely created this situation is destined to continue.
Given the importance to our economy and the health of our people in maintaining a safe roads system, the failure of our government to address our highway problems when we have the funds to do so is inexcusable.
Saving money to boost income from permanent savings is definitely in the state’s best interests, but that worthy goal should take a back seat when more investment in our infrastructure and people is both possible and the most responsible action to take.
— Veteran Wyoming journalist Kerry Drake is editor-in-chief of the nonprofit, online community newspaper, The Casper Citizen. He also moderates the WyPols blog.
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