Bill Sniffin: Modern Wyoming Parable: Who Moved My Severance Tax Cheese?

Publisher Bill Sniffin writes: "In a few short words, Wyoming is trying to pay for a champagne lifestyle on a beer budget."

Bill Sniffin

February 26, 20215 min read

Sniffin 1
(Cowboy State Daily Staff)

By Bill Sniffin, publisher

Wyoming’s current economic situation reminds me of the famous business book Who Moved My Cheese?

After living off severance taxes from the energy industry for half a century, the Cowboy State is enduring a time when the state is trying to maintain services without the money to pay for them. As fossil fuels decline, severance taxes paid by energy companies for coal, oil, and natural gas extracted from Wyoming are diminishing rapidly.

In a few short words, we are trying to pay for a champagne lifestyle on a beer budget.

That famous Cheese book by Spencer Johnson is about how people react to unpleasant change. It stars some mice and what happens when their regular supply of cheese suddenly disappears. It’s a lot more interesting than that, but the book is helpful in showing how people cope with loss of something they were used to counting upon.

Here in Wyoming, our economy had been based on fossil fuels for decades before we even became a state. Ever since the wagon trains used oil from the Dallas Dome oil field south of Lander in the mid-19th century until the present.

Some estimates have pegged our economy as based on 60 percent on fossil fuels.  Alaska, North Dakota, and Texas all have a similar reliance on fossil fuels, but no state earns as much severance tax percentage-wise as Wyoming does. Or did.

Wyoming is in a statewide bust when it comes to tax revenue. And since decades ago we chose to funnel all local and school money through the state, this means local communities and school districts are just as financially strapped as the state government is short.

Never mind that we have over $20 billion in the bank.  We are not destitute like we once were when Gov. Stan Hathaway looked around in 1967 and found the bank accounts empty.  Or when Gov. Mike Sullivan saw the state going broke in 1990 until a wealthy Jackson woman died, leaving millions to the state in taxes.  Now those were two very desolate times. 

We are not broke.

Like thousands of Wyoming ranchers, farmers, and small business people, we have lots of assets. We just do not have enough cash.

The federal government acts a lot like the caricature ditzy person who claims as long as he or she has checks in the checkbook, he or she can keep spending.

But our state constitution requires us to have a balanced  budget.  We cannot go into debt without violating state law.

Thus, our elected representatives in Cheyenne are digging in their heels and proposing draconian cuts to programs all across government.  Outside of paying for the highway patrol and plowing the roads, just about everything else is on the table.

Some legislators are so serious they signed pledges to oppose ANY new taxes.  I am against new taxes, too, but this seems a little extreme. But I digress.

Perhaps the simple solution is to diversify the economy and find new ways to pay for state government, right?

 Or why not just increase property taxes, fuel taxes, sales taxes, and other taxes.  But wait.  Can’t do that.  Too many legislators signed that pesky pledge. 

So, the only way out of this mess is to cut expenses.  Cut programs, cut services, and lay off state employees.  Cancel projects that both make sense and do not make sense. It may not matter.  We have to balance the budget.

Just like any middle class household in Wyoming, there are only two ways to make it work.  You increase your income.  Or you cut your expenses.

I predict this legislature will be brutal with its cuts. There will be no new taxes levied this time around.  Education will get hit the hardest. The various school associations have already sent to the trustees of all districts in the state a blueprint of where and how to cut.  Lobbyists will try to save programs, but get ready.

During Wyoming’s 1980s bust, the legislature had to cut its way to a balanced budget.  It pretty much worked but state government was a fraction of what it has become. During the go-go decade of 2002 to 2012, Wyoming was rolling in dough.  The money that energy companies paid in severance taxes provided for spectacular new schools across the state, plus huge new buildings at the University of Wyoming, the Hathaway Scholarship program, and many other forward-thinking programs. We also put a boatload of money away in mineral trust funds and rainy day funds.

In today’s bust, there could always be opportunities to be creative but, alas, the mood of this year’s legislature is just too dour. 

Our severance tax cheese may have been permanently diminished. Many of our leaders are in a state of shock over how to replace it.

One legislator told me that when it comes to reducing costs of programs, the fat is gone. Most of the muscle has been gnawed away. And now they are chewing on the bones.  That is a spectacularly accurate way to describe what our legislators are dealing with in Cheyenne during the 2021 session.

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Bill Sniffin

Wyoming Life Columnist

Columnist, author, and journalist Bill Sniffin writes about Wyoming life on Cowboy State Daily -- the state's most-read news publication.