The Joint Appropriations Committee has rejected a proposal from Wyoming Secretary of State Chuck Gray for a 35% budget bump to upgrade his office’s public business filing system.
Gray had requested $3.1 million to pay for a new enterprise system that would allow the department to handle an increase in business without adding employees. The request would have expanded his department’s biennial budget from $9.3 million to $12.6 million.
Gray said the denial was disappointing and that he thought there were some political motives behind it.
“It is unfortunate that some members of the committee prioritized playing politics with our budget rather than advance sound policy to ensure Wyoming retains its status as a premier destination for businesses to incorporate so that Wyoming small businesses can form and grow,” Gray said.
Gov. Mark Gordon had recommended approval of Gray’s, which was rejected by the committee during its biennial budget hearings last month.
Why It Was Denied
Jackson Democratic state senator Mike Gierau made the motion to reject the request. Gierau told Cowboy State Daily that Gray would never have voted to support a request like the one he made before the Appropriations Committee when he was a state legislator from 2017-2022.
“Candidate Gray and Secretary Gray are two different people,” Gierau said. “Candidate and representative Gray never would’ve allowed that.”
Gierau said elected officials should be held accountable for statements they’ve made in the past.
“He can say whatever he wants when running, not when he’s in office,” Gierau said. “I try to be as consistent as possible.”
Gray believes the committee is playing politics based on his record.
“For them to compare my ‘no’ vote on problematic budgets of previous years to my request for a necessary upgrade to handle the over $80 million in revenue generated by our office shows how political this was,” he said.
During his time in the Legislature, Gray was a well-known fiscal hawk, voting against almost every biennial and supplemental budget that came before him, and often commenting that the state doesn’t have a revenue problem, but rather a spending problem. He continued this sentiment while on the campaign trail during his 2022 secretary of state campaign, vowing not to expand his office.
What’s It For?
The increase would be dedicated to providing the Secretary of State’s office with a new online filing system, which would cost around $2.9 million for the one-time purchase, in addition to an ongoing yearly appropriation of $218,530 to run the new system.
The Secretary of State’s office is one of the few agencies within the Wyoming state government that generates revenue. Gray said the system would better allow his department to handle the increase in business filings it has experienced over the last few years, which resulted in a corresponding $8.5 million increase in revenue in 2023.
Wyoming ranks second in the nation for the most business filings, mostly spurred by the state’s relatively lax limited liability corporation laws.
“I was disappointed by the Joint Appropriations Committee’s decision to deny our request for an upgrade to our existing, antiquated business filing system, given our state’s exponential growth in business filings and revenue over the last year,” he said.
Gray isn’t adding any employees to his office despite increased business, and said the new filing system would increase efficiency and eliminate the need to hire more staff in the future.
The new program would allow for additional entity formations, online filing of amendments, notary registrations and lobbyist registrations to be filed online.
During Gray’s budget presentation in December, Rep. Bob Nicholas, R-Cheyenne, pointed out that the increase in revenue can be at least partially attributed to the Legislature raising the department’s rates for business filings in Wyoming, a measure Gray opposed while a state representative.
No Bid Yet
One of the biggest issues raised by the committee with Gray’s proposal is that he didn’t engage in an open bidding process to arrive at the $3.1 million cost for the new computer system, a move Gierau said Gray never would’ve permitted when he was in the Legislature or on the campaign trail.
“He can say whatever he wants when running for office, not when he’s in office,” Gierau said.
Gray and his staff argued that the purchase would equate to an upgrade of the current system rather than an entirely new platform, and thus could qualify as a sole source exemption from the bidding process.
Although he said informal discussions took place about the prices offered by other vendors, no formal request for proposal (RFP) was ever initiated, and it was determined by Gray and his staff that staying with the current vendor would be the most cost-effective solution.
Gray estimated that other vendors would charge four to five times more for the same service, and said that they had negotiated the final price “down quite a bit” with the current vendor, Utah-based Tecuity Inc.
This claim drew confusion from Sen. Tara Nethercott, R-Cheyenne, Gray’s 2022 Republican primary opponent.
“I’m just confused by that because you haven’t put the project out for bid,” she said to Gray. “So, how would you receive a lower offer?”
Micah Pfaffe, head of the technology division for the Secretary of State’s office, said discussions had been happening with Tecuity about the upgrade since as early as 2021, when former Secretary of State Ed Buchanan was in office.
The current filing system was customized and built for the state in 2007, which resulted in Wyoming becoming Tecuity’s first customer. Although this system used by the office has received updates and enhancements since then, the overall platform is the same.
Gierau said he wasn’t convinced by these arguments and pressed Gray about the optics of not taking bids.
Rep. Clark Stith, R-Rock Springs, said he found the benefits from the new program not worth the investment.
“It seemed like a pretty high price tag for a somewhat limited increase in functionality,” he said. “I did not see getting it as an emergency.”
Gray admitted to the committee he’s never been a big supporter of this approach in the past and that he would be open to engaging an RFP if granted the proposal.
The committee also rejected a request from Gray’s office to add $75,000 to its budget for various fraud protection and investor education efforts. Securities fraud has been a growing problem that the Federal Trade Commission has addressed.
Kelly Janes, compliance director for the office, said the state has seen a huge increase in cryptocurrency fraud. Janes said the additional money would help fight that and alert the public about businesses that have already been identified for fraudulent activities.
“We want to be proactive and get the word out about those red-flag warnings that people need to be aware of before people invest their money, and then it’s gone,” she said.
At an Appropriations Committee meeting in January, Rep. Tom Walters, R-Casper, mentioned how the Secretary of State’s office already spends around $700,000 on protection from securities fraud.
“I just don’t think they need to add another 75 to that,” he said. “This is what the job is entailed to do to begin with.”
Also No For Out-Of-State Litigation
Gierau also successfully added a footnote to the budget stating that no state money be used by Gray’s office for out-of-state litigation without specific legislative authority.
This was in response to amicus briefs Gray has filed with the Colorado Supreme Court and U.S. Supreme Court opposing efforts to remove former President Donald Trump’s name from 2024 election ballots. Gray said the filing of these briefs was not paid with state money and Gierau’s footnote could lead to “unintended consequences.”
“Wyomingites are outraged by these outrageously wrong attempts to remove Trump from the ballot, because these efforts by the radical left prevent Wyomingites from being able to choose who represents them for themselves,” Gray said defending the briefs. “It is deeply troubling to me that the Joint Appropriations Committee opposes our efforts to make sure that Trump will be on the ballot.”
Gray was also involved with a similar lawsuit in Albany County District Court, but as a defendant.
Although the committee has rejected the budget request, it could still be brought back through an amendment for the Legislature as a whole to consider when the biennial budget is discussed in the upcoming session.
Leo Wolfson can be reached at Leo@CowboyStateDaily.com.