By Leo Wolfson, State Politics Reporter
Gov. Mark Gordon presented his $353.9 million supplemental budget proposal Thursday, signaling a willingness to make expenditures he believes will pay dividends for the state’s future.
He used the analogy of a rancher in his budget request to the Appropriations Committee, stowing away hay for more lean years.
“We must protect what we have and make the best use of the opportunities set out to our state, ourselves, our successors, for a brighter future,” he said.
Conservative And Bold
The governor described his budget proposal as both conservative and bold –both words he believes represent Wyoming.
Gordon said the recent boom in the oil and gas industry has provided Wyoming with a “serendipitous amount of funding.” He said this success is surprising and lucky because of the many forces like President Joe Biden’s administration he believes are working against it.
“The fact is, we are moving rapidly toward being one of the best-managed funds in the country, perhaps the world,” he said.
$2 Billion In Rainy Day Fund
Ten years ago, coal, oil and natural gas made up 60% of the total local and state assessed valuation. Now, that sits at around 40%. Also a decade ago, 33% of Wyoming’s gross domestic product came from mining, now it’s 15%.
The budget leaves more than $2 billion in the rainy day fund while forgoing transferring a planned $908 million into this account. Two years ago, the state made $500 million in cuts. The state was able to temporarily bridge the gap with $412 million in COVID-19 federal funds.
How and whether to spend the unexpected influx of $738.8 million in increased revenue for the 2023-24 biennium will likely be one of the biggest questions the state Legislature has to answer this year.
Gordon said Wyoming is at a pivotal point in its history.
“It is our responsibility to not squander this opportunity and invest in our future in a way that will pay off for years to come,” he said.
Gordon said the last year resulted in Wyoming’s most diverse economy in the past decade.
“What that means is our economy is starting to diversify across all sectors,” he said. “That’s incredibly important, because when we have shocks on commodities, we need to be able to diversify to absorb those shocks.”
Gordon mentioned former Gov. Stan Hathaway’s decision to allow a severance tax, but only on the condition that the state create the Permanent Mineral Trust Fund. That fund now is one of the most reliable sources of revenue for the state, and at times its biggest revenue generator.
Gordon recommends putting $412 million in the PMTF, which he says will pay dividends in saved taxes down the road.
Gordon said trust funds have grown in Wyoming primarily because of the severance tax and 1% diversion tax, briefly mentioning how he and state Treasurer Curt Meier have a different opinion on the matter.
“It’s so easy to talk about how you’re growing a fund from management,” Gordon said. “I think you all know we do a very good job of spending our capital gains. It’s very hard to grow a fund when you spend all of your capital gains.”
Gordon said the state also needs to be able to engage private partners to step up and provide matching money for Wyoming’s trust funds in a tax deductible manner.
“We’re building people that make Wyoming’s work environment and workforce the very best,” he said.
To help with this effort, Gordon proposes an additional $35 million for Wyoming’s Tomorrow Fund, more than doubling its current funding. He’s also proposing an additional $30 million for the Business Ready Community Grant and Loan Program for economic development. He said retaining businesses would be a key focus for this effort.
The governor also addressed the rampant inflation that has hit Wyoming over the past year, saying this poses a particular challenge to low-income people living on fixed incomes.
The State Building Commission estimates the cost of inflation has caused an increase of $172 million in capital construction costs. Gordon has advocated for contributing an additional $50 million for these projects.
“We simply underestimated the effect of inflation on capital construction,” he said.
Addressing inflation makes up the second largest part of his budget request. He has set aside $13.7 million in general funds to address other inflationary costs associated with offering state services, but excluding state employee compensation.
Gordon said this figure came about as a result of studying increased costs over the past year.
“We will continue to monitor inflation and request adjustments only when identifiable and necessary,” he said.
Boost For Retirement
He also recommended making a 1%, $3 million increase to the employer contribution of the state employee retirement fund.
State Sen. Larry Hicks, R-Baggs, said he wants more clarification about the breakdown of types of retired employees that include school teachers, state workers and local governments before approving this.
“I don’t know that it’s necessarily in my mind appropriate to take state general funds and then supplement retirement incomes for people who were employed by a municipality or a special district unless we take money out of those revenue sources,” he said.
Gordon pointed to a number of vacancies in state government employment. Specifically, he mentioned the Wyoming State Penitentiary in Rawlins where there are significant staffing shortages.
He proposes $2.4 million to help alleviate these issues by adding at least 75 beds to the lower security, rehabilitative prison facilities across the state.
Raises For State Workers
He is proposing raising employee pay by $61 million. The last time Wyoming issued a pay increase was 2020. State employees are now on average nearly 17% behind the 2022 marketplace for average wages, he said.
Gordon added that bringing employees closer to market levels would allow the state to forgo cost-of-living adjustments in the coming years.
He has also requested an additional $1 million for the property tax refund program to ensure its funding into the future.
“Demand is increasing,” Gordon said, adding he expects the demand to rise moving forward.
He has requested $26 million for city, town and county governments “to take on inflation and improve infrastructure” and $10 million to be put into the Mineral Royalty Grant program that was defunded in 2022 because of the influx of federal dollars for these projects.
The MRG is used to address challenges small communities face when trying to resolve emergency infrastructure situations.
Gordon said he does want the rules of this program more rigidly defined as to what qualifies as an emergency.
“There’s some counties, a bad Thursday in collections will put them where they don’t make payroll,” Sen. Dave Kinskey, R-Sheridan, said in agreement. “We really have to limit it to the needy.”
Gordon also wants to set aside an additional $50 million in matching money to help lure carbon capture and storage, hydrogen fuel and rare earth mineral mining projects to Wyoming. He said this money would revert to savings if unused.
Gordon wants to add more than $615,962 for three additional Department of Environmental Quality staff to help with permitting for carbon capture efforts and to “withstand an assault” from the Environmental Protection Agency.
He said under the current EPA ozone calculations, pollution caused by forest fires is not counted separately from the overall total.
“Energy is changing very rapidly,” he said. “We have an administration dedicated to changing to green and renewable energy sources.”
Gordon also said the TerraPower nuclear power plant in Kemmerer was discussed in a favorable manner at the United Nations Climate Change Conference held in Egypt last month.
“Oddly enough, they are now coming to realize that the transition is not going to be as easy to effect as they initially thought,” Gordon said.
He also wants to increase the University of Wyoming’s School of Energy Resources budget by $14.7 million.
He also is proposing $5 million for behavioral health and putting $161,696 in special revenue into the Mental Health Board to increase its ability to process more applicants into the state system.
Gordon also wants to give $22 million to the state’s nursing facilities, $2.8 million to the Wyoming Homeservices Program and $1.8 million in children’s dental services.
“We cannot rest on our laurels when it comes to the health of our citizens,” he said.
Gordon also proposed $613,007 for the Office of State Lands and Investments. The money would be used to improve communications and transparency of the agency by adding staff.
“Most everybody in this room recognize that OSLI has got some problems,” he said.
Recently, a 2018 land leasing dispute was brought to the attention of the Agriculture Committee and Management Council, where most members agreed the dispute was mishandled likely due to inadequate staffing.
Gordon is requesting an additional $1.4 million to deal with animal land damage such as coyote attacks on livestock, and $1.5 million to fight invasive species.
“The sun is shining and the fields are ready,” Gordon said. “We need to make some hay.”