(Opinion column) — Wyoming, we have a problem. A $1.3 billion problem.
And that’s just the total budget shortfall legislators are staring at over the next three years to fund state government and education. If the energy industry takes even longer to recover from its lower production and price levels, the already massive shortfall will become worse.
What’s the Republican legislative leadership’s solution? Cut agency budgets and sock more money away so we can live off capital gains and interest from our investments.
Wyoming has about $6.9 billion in its Permanent Mineral Trust Fund that was created in 1974 to save a portion of mineral severance tax revenue from the state’s energy boom. That money cannot be spent, but Wyoming is allowed to invest some of it in stocks and bonds.
Lawmakers also created a so-called rainy day fund — officially called the Legislative Stabilization Reserve Account — in 2005 to protect the state during times when the minerals industry goes south. It has grown to $1.8 billion, and with cloudbursts over several cities and counties, at least a small portion of the account could be used to help keep them from getting drenched.
By using some of those rainy day funds, Wyoming wouldn’t have to cut essential services to the bone or gut all of its pilot projects. The state could also repair its infrastructure, including its rapidly deteriorating highway system.
But the way Republican officials discuss their plans to deal with the anticipated shortfall through 2017, the rainy day fund might as well be called the Don’t Touch a Dime Fund. They believe the account should grow unabated until it reaches $3.9 billion, the current amount it takes to pay the state government’s freight for two years (not including education).
Does anyone actually think the conservatives who run the Legislature would allow the rainy day fund to be tapped then? By the time it reaches that level, the magic number of funds for a biennium will likely be many hundreds of millions more — maybe even billions. They may never be content to do anything but pour money into savings no matter how much economic harm any sector of the state is suffering. Especially the poor.
According to the recent forecast of the state’s Consensus Revenue Estimating Group, Wyoming is staring at a General Fund shortfall through 2017 of $619 million. Add almost $700 million more when K-12 education funding is also included.
This was the news the Joint Appropriations Committee convened to ponder at a meeting in Casper last week. The reaction of the panel to the predicament was totally predictable to anyone who has watched the JAC during the past decade.
Co-Chairman Sen. Tony Ross (R-Cheyenne) asked for any proposals the committee might consider sponsoring. Rep. Cathy Connolly (D-Laramie) said she would like legislative staff to work out the numbers for all options to ease the blow of shrinking revenue, including eliminating automatic sweeps of some revenue streams into Wyoming savings accounts. She noted those types of sweeps take place without considering expenses necessary to keep state government running.
Co-Chairman Rep. Steve Harshman (R-Casper) looked like a kid whose favorite toy had been snatched from his hands and smashed against the wall.
“If we are going to embrace this thing as a trust fund, and really count on it as an investment, you can’t take out the inflation proofing [from automatic savings sweeps],” Harshman said. He added Wyoming is in good shape to cover a large shortfall precisely because of its decision to keep building up its permanent funds.
Conservatives like to endlessly pat themselves on the back for having the wisdom to put money in the bank. Saving is certainly a good thing to do when the state can afford it, but foolhardy when infrastructure is crumbling and necessary programs are needlessly being chopped.
The state has seen record returns on its realized capital gains and interest from its investments in the past few years. But Harshman and other GOP lawmakers adamantly refuse to consider changing any laws to reduce the amount of investment income that is automatically put into permanent savings.
“I am absolutely in favor of savings, but I’d like to do it consciously,” Connolly said after the meeting. “We have money that’s already been swept into the permanent funds, instead of making a conscious choice over the next biennium about whether we need that money to go into savings.”
What it boils down to, Connolly said, is the Legislature should make the same kinds of decisions made in all households. “Do you want to put $10,000 into your savings account, or do you want to fix your roof?” she asked. “Right now it might be time to fix the roof.”
The committee’s other Democratic member, Sen. John Hastert of Green River, offered a common-sense compromise in the savings vs. spending fight that should be seriously considered. He said funds that lawmakers agree may be needed for emergencies can simply be put into a holding account, so the money can still be used for permanent savings if it turns out it isn’t needed after all.
Harshman was having none of it. “You can talk about it all you want, but I’m going to be opposed [to other options],” he said. Since he is the one responsible for selling the JAC’s budget to the rest of the House, that’s not encouraging to legislators who want to consider anything besides savings and ruthlessly cutting the budget.
Rep. Mike Greear (R-Worland) said automatic deposits into savings is necessary because if there is any money at all available, it will always be spent. Does he blame it on those tax-and-spend Democrats in the 90-member Legislature — all 13 of them?
Ross tried to lighten the mood a bit. “Nobody has an heir that’s dying who’s worth millions?” he asked, smiling. He was referring to state government’s good fortune in the mid-1990s when an heir to the DuPont estate who lived in Jackson died, leaving Wyoming millions of dollars. Those were the days when the state somehow kept getting bailed out every year it had budget woes, including finding unexpected money in state accounts that legislators jokingly dubbed “coffee cans.”
“Then the coal-bed methane boom hit, and we went from having a $585 million shortfall to about a $585 million surplus,” Ross recalled.
While it would be great to have such a monumental budget reversal again, state officials can’t sit back and wistfully hope for their luck to change. With CREG’s expertise, lawmakers now have a more sophisticated set of tools and procedures to forecast revenues to inform their budget-making, and those don’t factor in magical infusions of cash from deceased wealthy Wyoming benefactors or energy booms.
CREG’s work falls right in line with other groups that regularly track the mineral industry. The Economist’s Intelligence Unit (EIU) predicts crude oil prices will rise slightly each year through 2019, but nowhere near the $100-plus per barrel figures of 2013.The EIU sees a slight increase in coal prices from now until 2019, but continued low, flat prices for natural gas during the same period.
What bothers me the most about the GOP’s steadfast, no-compromise attitude toward savings and spending is they insist that assisting the poor shouldn’t be funded by government. If people don’t want to work and pull themselves up by their bootstraps, these lawmakers say, private food pantries, churches and homeless shelters should help them. The prevailing attitude is buy them a bus ticket and let them become another state’s problem.
It’s wrong to balance the budget on the backs of the poor. Wyoming has plenty of money in its rainy day fund to help those in need, and GOP officials should stop pretending it doesn’t exist.
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Topic: Wyoming savings