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Government spending

CREG: Latest Wyoming Revenue Estimate Shows $48 Million Drop

in Government spending/News/politics
2690

By Bob Geha

Wyoming legislators will have $48 million less to spend over the next two years than originally believed, according to a report issued Friday.

The state’s Consensus Revenue Estimating Group (CREG) submitted a report to the Legislature’s Joint Appropriations Committee that showed revenues for the state over the next biennium, running from July of 2020 through June of 2022, will drop below levels predicted in October.

The CREG told JAC members the decline was largely due to drops in natural gas prices.

The JAC is meeting to prepare its budget for the biennium for presentation to the Legislature, which opens its budget session on Feb. 10. After all of the state’s agencies are funded, officials believe lawmakers will only have about $20 million to $25 million to finance other projects.

Although the state has reserve funds it can use to pay some operations, those reserves will not last forever and lawmakers will have to take that into account, said JAC member Rep. Tom Walters, R-Casper.

“There’s going to be multiple legislators that have great ideas coming from their neck of the woods and we’ll just have to see how those work out,” he said. “Wyoming is in a good position as we do have some reserves that can be used, but those reserves won’t last forever, so we have to make some hard choices for certain.”

Rep. Albert Sommers, R-Pinedale, another JAC member, said he believes the Legislature will have to be careful with programs that put an ongoing drain on state coffers.

“Those ongoing expenses of government that we have, we need to be careful where we inflate those and where the needs are, because I really do worry about revenues going into the future,” he said.

As the state adjusts to lower revenues from its energy industry, it might turn more to the tourism and outdoor recreation sectors to make up for declining income, said committee member Sen. Mike Gierau, D-Jackson.

“It really puts the attributes that this state loves and the things that we love about living here and puts it right out front,” he said. “We want to display that to the world. That’s the way we can get people to come, to visit, to spend money, which creates money for the state. It’s a good bet for the state.”

How the Wyoming Legislature builds the state budget: A primer

in Government spending/News/politics
Legislature
2641

By Laura Hancock, Cowboy State Daily

On Feb. 10, the 2020 Budget Session of the Wyoming Legislature officially begins, one that could be somber and frustrating — considering Gov. Mark Gordon has told lawmakers that after mandated expenses they only have around $23.5 million to play with.

As in prior budget sessions, the 12 members of the Joint Appropriations Committee, which crafts the state’s two-year spending bill, has met for a good chunk of December, poring over rows of numbers, grilling state agency heads and discussing the needs of the state. 

Most sections of the biennial state budget that lawmakers will pass will go into effect July 1 and end June 30, 2022. Read on to learn more about the JAC and the budgeting process. 

The agencies

The budgeting process starts with the heads of state agencies, which fall under the executive branch, submitting budget requests to the governor budget in the autumn before budget sessions, which the Wyoming Constitution states must occur during even-numbered years.

The governor

Each governor is required to release budget recommendations by Dec. 1 prior to a budget session, per the Constitution.

“What the governor does is he meets with all agencies and listens to their requests,” said John Hastert of Green River, a former Democratic lawmaker who served on JAC for about eight years.

The budget recommendations that the governor prepares for the Legislature show the agency requests and whether he accepts, modifies or rejects each one, Hastert said. 

Last month, Gov. Mark Gordon submitted budget recommendations with the expectation of around $3 billion in revenues from the General Fund — the state’s main bank account — and the Budget Reserve Account, which is akin to an overdraft account for the General Fund. 

Gordon largely recommended the Legislature keep spending low, considering the ongoing slump fossil fuel revenues, which most state leaders do not believe will be reversed any time soon, as the natural resources industry is undergoing fundamental changes. 

Gordon called for significant reduction in capital construction and limits on tapping the rainy day fund – to be used solely for legislatively-mandated educational needs and local governments. 

“We have only $23.5 million in structural (ongoing) funding available toconsider distributing during this biennium to any entity, including the entire executive branch, higher education, the Judicial Branch, and the Legislative Service Office,” Gordon said in his budget recommendations. “Additional spending cuts are on the horizon and appear imperative to keep Wyoming moving forward.”

Budget hearings

During the first week of December, the governor and agency chiefs meet with the JAC and explain budget recommendations and requests.

This year, Gordon met with the JAC on Dec. 9. The agency heads met with the JAC through Dec. 20. 

JAC interviews with agencies are expected to continue into the beginning of January, from Jan. 6-10 and again from Jan. 13-17.

Hastert said the information during the interviews with the agencies is valuable: “They get first-hand information,” he said. 

JAC markup

In the last two weeks in January, JAC markup begins. Lawmakers will start on the first pages of the governor’s budget recommendations and “mark up” the items with their own ideas of what the budget should look like. 

“They start with the governor’s recommendations and it’s either an ‘aye’ vote or ‘no’ vote or modify,” Hastert said. “Most of the time, it’s usually taking more of a cut. It’s just the nature of JAC to try to cut even further.”

The JAC’s version of the budget is the one that will be submitted for review by the Legislature.

Actual Capitol remodel costs just higher than estimates

in Government spending/News
Wyoming Capitol Square Project nears completion
2640

By Ike Fredregill, Cowboy State Daily

After nearly two decades of setting aside funds and working on design and construction, renovations to the state Capitol and Herschler State Office Building are nearly complete, a Wyoming State Construction Department spokesperson said.

“The Legislature started saving for the Capitol Square Project in 2003,” said Suzanne Norton, the state Construction Department project manager. “The projected substantial completion date for construction is Jan. 31 (2020). Final completion is typically 90 days after the substantial completion date.”

The Construction Department provided Cowboy State Daily with documents summarizing the cost of the Capitol Square Project as of Dec. 1, 2019. 

The square project is an extensive overhaul of the Capitol and Herschler buildings. A new central utility plant was also built to service both. 

While numerous aesthetic renovations were made to the Capitol, work also included several major infrastructure updates. 

“Before the project, only about 75 percent of the Capitol had heating and cooling,” Norton explained. “We also installed a complete fire suppression system throughout the building, which it didn’t have before.” 

On the Herschler side, crews peeled the building back to its bones, said Mel Muldrow, an administrator for the Construction Department’s Construction Management Division.

“The interior was all gutted out — that’s walls, flooring, electrical, everything except for concrete slabs — and replaced,” Muldrow said. 

Originally estimated to cost about $305.6 million, the value of the current contracts in place for the project total $307.8 million, according to Construction Department documents. 

While close to the original estimate, the value of the current contracts values does not include furniture for the Capitol, which is still in the request for proposal process and was originally estimated to cost about $4 million. 

“The project should not go above that cost ($307.8 million), but we are not done,” Norton said. “There are a number categories we are still working on getting contracts for.”

The state has paid about $289 million to date, with a remaining debt of about $19 million, not including contracts still in the request for proposal process.

Where did it all go?

The Construction Department broke down the projects cost into six categories: Owner’s overhead, construction services, equipment and furnishings, temporary facilities, relocation and contingency fund.

Construction services

Estimated at $223 million, the current value of contracts for construction services is $256 million.

“Construction services includes all the work done by our construction contractors and abatement companies, among others,” Norton said. “It’s all the nuts and bolts, plus some.” 

Accurately guessing construction costs and materials prices years ahead of time can be challenging, which is why the Legislature built a $20 million contingency fund into the project cost, Muldrow said.

Basic construction costs were estimated at $219 million, but contracts for the work are valued at $250 million, an increase of about $31 million or 15 percent.

A new parking lot that was slated to cost about $600,000 was never built, Norton said. 

However, the abatement estimate was about $550,000, but wound up costing triple at $1.5 million.

“Abatement is the removal of usually hazardous materials, such as lead and asbestos,” Muldrow said. “You can only guess at where you’ll find those materials. One example is when we took the exterior walls off the Herschler building, we discovered they were put up with hockey-puck sized chunks of glue material, which tested positive for asbestos.” 

Contingency fund

Construction Department documents state $20 million was set aside for the contingency fund, all of which was spent.

“One of the things you always want to have in a project is some extra money for all the little things that come up that you didn’t expect,” Muldrow said. 

Norton said contingency monies were dispersed to nearly every area of the project throughout the process.

Temporary facilities

During the approximately three years of renovations, about 750 state employees were moved out of their offices in the Capitol and Herschler buildings and into offsite state buildings or space leased from private companies around Cheyenne.  

The state estimated the cost of temporary facilities for those workers would be about $14.7 million, but the actual cost will be $15.2 million, Construction Department documents state.

The leases were originally estimated to cost about $7.6 million, but are currently valued at $9.1 million. In December, a Construction Department spokesperson said all relocated state employees were moved back into state-owned properties. 

State improvements to the temporary facilities were estimated to cost about $4.8 million, and the contracts’ value is currently $4.1 million.  

“When you move a government office out of the Capitol, and you want to hold a legislative session in an old retail store, it’s not an apples-to-apples fit,” Norton explained. “Some changes will need to be made to the new property.”

Not everyone was pleased with the tenants’ improvements, however. Wyoming Financial Building owner Wayne Voss sued the state in 2017 for failure to pay almost $1.5 million in rent. State officials argued they were withholding rent because the state had to make improvements to the building, but Voss said the state never sought his permission to make those improvements as required in the contract.

Owner’s overhead

Before hammers can pound nails, pens need to scratch paper and the owner’s overhead category of the Construction Department’s cost summary is an accounting of all the time and ink spent to facilitate the project’s construction efforts, Norton explained.

“There’s research you have to do, permit fees, legal advertising, design costs and a host of other non-construction costs,” she said. 

Estimated to cost about $7.3 million, the owner’s overhead category received funds under the “miscellaneous” line item recommended by the Capitol Square Project Oversight Group, which eliminated the contract value cost and created a credit of about $94,000. 

The funds were ultimately reallocated within the project budget to be spent on actual construction items such as abatement, concrete repair, roof repair and replacement and fire suppression piping that were not originally included in the project scope, Norton said.

Design services is included in the overhead category, but separate from the overhead items in the red.

Estimated at about $30 million, design services included the architect costs and materials testing, which are currently valued at $31.5 million.

Equipment and furnishings

“Furniture, fixtures and equipment are generally defined by design and construction industries as anything that would fall out if you picked up a building and shook it,” Norton said.

Estimated to cost about $8.3 million, the current contracts’ value is $4.1 million. Norton said $3.7 million was spent on furniture for the Herschler building, but no contract has been signed for Capitol office furniture, so the cost of that furniture is not included in the contracts’ value.

Artwork for the two buildings was estimated to cost $100,000, and to date, about $336,000 has been spent on artwork, the department’s documents state.

Relocation 

The estimated cost to move people, furniture and technology to and from the Capitol and Herschler buildings was about $1.9 million, and the current contracts’ value is about $1.2 million.

Budgets, black eyes, bare knuckles: MMA board keeps Wyoming on combative sports map

in Government spending/News
2523

By Ike Fredregill, Cowboy State Daily

Seven years after creating the nation’s first Board of Mixed Martial Arts, Wyoming is still grappling to stay ahead in the evolving world of combative sports. 

“We were the first state to regulate and sanction bare-knuckle fighting,” MMA Board Chairman Bryan Pedersen said, explaining the fighting style was sanctioned in 2018. “It was legal before, but there was no regulatory body. Now, everyone’s doing it. But somebody had to be first, and I’m proud it was Wyoming.”

But, like the fighters it was created to protect, the MMA board has to roll with punches, especially when they hit below the budget belt.

Carbon extraction not only drives the state’s economy, but it attracts combative sports most active demographic — people between the ages of 18 and 25. 

“In 2015, they started capping (oil and gas) wells,” Pedersen said. “For 16 months, we didn’t have one event, because you had an exodus of fans and combatants.”

The board’s budget is funded entirely by license fees, event permits and gate-fee percentages, he explained. 

“We believe we can do our job with no additional funds from the general fund,” Pedersen said. “If this thing ever runs out of money, it auto-collapses.”

Knocking out the books

An MMA fighter, financial adviser and former state representative, Pedersen sponsored the bill to create the board in 2012. As a member of the state’s Revenue Committee at the time, however, he said he wanted to make sure the board could be self-sufficient, so he added language to the proposal that forced it to collapse if its bank account ran dry.

“I’d seen enough of people coming to the Legislature asking for money,” he recalled. “I wanted to make sure that was never this.”

Without a physical location or salaried staff, keeping the board in the black seems like it would be easy even during the slow years, but Pedersen said the devil is in the details.

“We pay the Department of Administration and Information to keep tabs on our account,” he explained. “So, during that down period when nothing was going on, we were paying them to tell us nothing was going on.”

According to information provided by the State Auditor’s Office, the board spent about $2,300 in 2016 and approximately $2,500 in 2017. 

“We nearly ran out of money,” Pedersen said. “At one point, I bought six t-shirts from the board for $2,000 just so we could pay (the Department of Administration and Information). Then, oil came back, and now, we’re having more events.”

After regulating bare-knuckle boxing in 2018, the board’s expenditures more than tripled to nearly $9,000, before dropping back to about $6,000 so far in 2019. Pedersen said after Wyoming sanctioned bare-knuckle fighting, other states followed suit, decreasing the board’s income because of a lack of events.

“We only receive income from fighters’ licenses, promoters’ licenses, event permits and 5 percent of the gate fee,” Pedersen said. “We spend our money on training for officials and our at-will employees as needed.”

The board lists two at-will employees on its website: Board Representative Nick Meeker and Jeremy Arneson, an executive assistant.

To ensure adherence to the board’s regulations, one representative is paid to attend each event. An at-will employee is also paid to attend board meetings and perform administrative duties. Since 2014, the board has permitted 28 events, most of which were MMA bouts, Pedersen said. He did not provide data for events prior to 2014.At-will employees are paid fixed rates for specific services, but not the commissioners.

“No commissioner takes compensation of any kind,” Pedersen said.

The board has also banked $10,000 to settle any disputes over contested match outcomes, he added. 

‘Above and beyond’

BYB Extreme promoter Mike Vazquez said his company presented data about bare-knuckle fighting compared to traditional boxing across the nation before finding an open ear in Wyoming.

“We went around the country showing data we collected, and the crazy thing is — everywhere we went, they agreed with us,” Vazquez said. “But, (Pedersen) and his group were really the first to act on the data.”

In a traditional boxing match, about 700 punches are thrown, more than half land and landed shots are typically to the head, he explained.

“With bare-knuckle boxing, our rounds are shorter and there’s less of them,” Vazquez said. “Our fighters don’t have gloves, so they don’t throw a lot of shots to the head.” 

During a typical bare-knuckle fight, he said less than a hundred punches are thrown, fewer connect and less than half land on the head, he said.

“Having Wyoming take that step has now let other states take the step,” Vazquez said. “We’ve seen at least five other states regulate the sport, and I’ve heard several others are in the works.”

BYB Extreme hosted a bare-knuckle event at the Cheyenne Ice and Event Center in April.

“Wyoming was great, the people were so welcoming,” Vazquez said. “We stayed at the haunted hotel there – the Plains Hotel — and the MMA Board was fantastic to work with. They went above and beyond.”

Despite the number of notches in its belt already, the board has big plans ahead, Pedersen said. 

“We have a huge drive from promoters and fighters to regulate boxing,” he said. “They want to legitimize their bouts, because if a person fights in an unsanctioned bout, it doesn’t count.”

While the MMA board regulates MMA, kick boxing and bare-knuckle boxing, traditional boxing is not currently in its purview.

“Right now, a commission is coming from Kansas and regulating a few bouts,” Pedersen said. “The Association of Boxing Commissions (ABC), the governing body of boxing and MMA nationwide, permits sanctioning bodies to regulate interstate.”

In order for boxers’ fights to count toward their official record, ABC requires them to be licensed by their home state, he explained.

“We don’t have licensure body,” Pedersen said. “All these guys that are out there putting in the blood, sweat and tears cannot get a license.” 

The board plans to pursue authority to issue licenses to Wyoming fighters utilizing its current funding method, which would require no additional funds from the state, he said. 

“We do this out of a passion for the sport,” Pedersen said about his service on the board. “I love Wyoming, and I’m not going anywhere. I hope to be doing this for a long time to come.”

Capitol’s new furniture might not be delivered until after 2020 Budget Session

in Government spending/News
2519

By Ike Fredregill, Cowboy State Daily

Months after Wyoming hosted a grand reopening of the state Capitol building, legislative and executive staffers are still working with folding tables and temporary furniture.

During a Capitol Building Restoration Oversight Group meeting Nov. 15, group members voted to rework a Request For Proposal (RFP), which could provide furnishings for the newly renovated building. 

Oversight Group member Sen. Eli Bebout, R-Riverton, said the group originally hoped to see the Capitol furnished prior to the 2020 Budget Session. But reworking the proposal could prevent that goal. 

“We’ve had several issues that have arisen out of our original RFPs,” Bebout explained. “We specced this RFP to a certain greater quality, but the manufacturer that could meet those specs went out of business.”

Additionally, he said the group wanted to ensure Wyoming furniture suppliers had an opportunity to bid on the reworked proposal. 

“The original RFP went out about 3-4 months ago,” Bebout said. “It’s a long RFP, because it gets into the specifics.”

Bebout did not have the specifics on hand at the time of his interview, but instead, directed Cowboy State Daily to the Wyoming State Construction Department for details regarding the furniture RFP.

Construction Department spokesperson Travis Hoff said the agency declined to comment on the RFP details, process, amendments or creation, because the document was being reviewed by the Wyoming Attorney General’s office. 

In an email, Hoff provided the state statute used to create the RFP, which specifies that the agency issuing an RFP can ask for certain specifications or products. However, the law also states if the specified product is not available to “responsible Wyoming resident suppliers,” that fact cannot be used as a reason to prevent Wyoming vendors from submitting bids.

Hoff also confirmed some staffers were currently working in the Capitol on temporary furniture, and while no agencies were still renting space outside state-owned buildings, some had yet to move into the Capitol.

Wyoming Legislative Service Office Director Matt Obrecht said his staff moved into the building earlier this summer.

“We’re working on folding tables and have been since June,” Obrecht said.

Bebout said he wasn’t fond of the situation, but he didn’t place the blame at anyone’s feet. 

“I thought we would probably have it done before the budget session, but there’s really nobody to blame,” he said. “If we don’t get (new furniture) by the time the budget session starts, then we’ll use the old furniture and make it work.”

Gordon releases tight budget for next biennium

in Government spending/News
2396

Gov. Mark Gordon’s release of his budget proposal for the 2021-22 biennium on Monday came with a recognition of the declining fortunes of Wyoming’s mineral sector.

Gordon said his budget proposal — his first as governor — kept spending low without cutting programs.

“The point to me has been to understand what those budget cuts will mean operationally across the whole of government,” he said during a news conference Monday. “I think that’s a process that takes more time. We haven’t identified any programmatic cuts at this point.”

Between spending requirements set by law or the Constitution and limits on revenues — estimated to total $2.26 billion during the next two years — Gordon said he is recommending a budget that he said will keep spending low and reduce capital construction.

The budget for the General Fund — the state’s main bank account — recommends providing public schools with $161 million from Legislative Stabilization Reserve Account on top of the $1.7 billion schools are to receive from the Schools Foundation Program. In addition, he recommended $105 million be given to local communities.

Gordon’s budget proposes spending $94.7 million on capital construction rather than the $150 million proposed to his office. He also recommended spending $238 million on school construction and $21 million for one-time bonuses for state government employees.

“My goal in this budget was to take care of people first because they are key to a productive government,” he said. “I have mentioned several times how incredibly hard working people in Wyoming government are. And I recognize that they have not had the recognition that they have really deserved over time.”

Gordon, in his comments during the news conference and in the letter to the Legislature accompanying his budget proposal, said his budget was prepared with an eye toward changing economic conditions.

“These changes, including declining coal production and low natural gas prices, will impact how we fund government services over the next years and probably on into the future,” he said.

The Legislature’s Joint Appropriations Committee will begin its review of Gordon’s budget in a series of meetings to be held through December and January. The committee will forward its recommendation for a biennium budget to the full Legislature, which begins its 2020 budget session in February.

2021-22 BUDGET POINTS

  • Total proposed budget: $3.2 billion
  • Appropriation for capital construction: $94.7 million
  • Appropriation for local communities: $105 million
  • Appropriation for School Foundation: $1.75 billion
  • Appropriation for school construction: $238 million
  • Appropriation for Wildlife and Natural Resource Trust Fund: $12 million
  • Appropriation for Energy Commercialization Program: $25 million
  • Appropriation for the University of Wyoming: $438 million
  • Number of new employees: 35

State long-term debt is real issue of concern, legislators say

in Government spending/News
2319

By Cowboy State Daily

Wyoming’s short-term revenue and budget problems are not as concerning as the state’s long-term deficit, according to two members of the Legislature’s Joint Appropriations Committee.

Sen. Eli Bebout, R-Riverton, the committee’s chairman, and Sen. Mike Gierau, D-Jackson, said the Legislature needs to address the fact that for several years, state spending has exceeded income, with the difference being made up through a combination of spending cuts and the use of money from various savings accounts.

Gierau said the state has already made significant reductions in spending to address what is called the “structural deficits.”

“A lot of folks need to realize that … we have less employees in state government than we had eight years ago,” he said. “Government is smaller. Programs are smaller.”

While the state could use about $1.6 billion from its reserve accounts to resolve the issue on a short-term basis, the action would deplete those accounts and the outlook to replace that money is not good.

“Over the next five years, with declining revenues, those ‘rainy day’ funds are anticipated to start to shrink if we keep spending at the same levels,” Gierau said. “And we won’t have money, given our current revenue picture … to replace them.”

The decline in mineral revenue has had a significant impact on the state’s revenues and the Legislature will have to look seriously at some action to deal with issue on a long-term basis, Bebout said.

“The challenge is to not just kick the can down the road,” he said. “I think we need to start making progress on our future to deal with our structural deficit.”

Specifically, the state needs to make plans for the day when mineral revenues no longer contribute a large amount to the state’s income, Bebout said.

“The revenue stream and the way we generate revenue is changing,” he said. “Minerals will not be able to carry the load like they have in the past. We need to be prepared for that and start moving in that direction.”

Several legislative committees are looking at ways to boost the state’s income, including the creation of a statewide lodging tax, an increase in gas taxes, a possible increase in property taxes and a corporate income tax.

Over half of the anticipated deficit spending — $250 million — can be traced to education funding and a legislative committee recently approved a $19 million increase in education spending to account for inflation. Legislators argued the increase must be approved to comply with Wyoming Supreme Court orders regarding school financing.

Bebout said he disagreed with such mandates being handed down by the court and said education spending should be determined by elected officials.

“Quite frankly, I’m tired of the courts dictating how we spend money on education,” he said. “I think it should be up to elected officials, i.e., the Legislature to make those decisions. If you don’t like what we do, you vote us out, rather than have the court tell us what to do.”

What if coal production drops to zero? Legislature looking for new revenues

in Energy/Government spending/News/Taxes
Electricity
2270

By Laura Hancock, Cowboy State Daily

Coal production in Wyoming has dropped by over 100 million tons in the past decade, and state Sen. Cale Case doesn’t think the downward slide is close to finished.

“There isn’t a scenario where it turns around, where the decline stops,” said Case, R-Lander, a co-chair of the Wyoming Legislature’s Joint Revenue Committee. “No one can articulate that.”

That will likely spell trouble for state coffers, which are dependent on coal revenue to pay the bills.

What if coal production trickled down to zero? It’s not entirely a hypothetical question these days, considering PacifiCorp’s recently announced draft plan to retire coal plants early.

Fueling state accounts

Wyoming coal producers pay severance taxes, federal mineral royalties, coal lease bonus revenues and ad valorem taxes at various points of the mining process, which flow to different state, education and local government funds. But each revenue source has decreased in the past 10 years:·      

  • Severance taxes: In 2009, mining companies paid the state $273.3 million. In 2018, they paid $198.8 million. In 2024, state projections show they could pay $185.9 million.·      
  • Federal mineral royalties, which are divided between the federal and state governments by 51% and 49% respectively: Wyoming received $262.5 million in 2009 and $198.1 million in 2018. Federal data didn’t contain royalty projections for the future.·      
  • Coal lease bonuses, which have funded Wyoming’s ambitious school construction program, were $213.6 million in 2009 and $5.3 million in 2018. From 2019 to 2024, the state estimates $0 from the bonuses, collected when mining companies pay for expanding operations on federal land. There are no expectations that mines will expand operations in the near future. ·      
  • Ad valorem taxes, assessed on the value of coal and paid a year after the assessment: Coal companies paid taxes on $3.8 billion in 2009 assessed valuations. They are expected to pay taxes on $2.8 billion in 2018 assessed valuations. By 2024, state projections show valuations falling by another $100 million to $2.7 billion.

The total income from severance taxes, federal mineral royalties and coal lease bonuses dropped from $749.4 million in 2009 to $402.2 million in 2018.

Case notes these figures don’t include sales and use taxes companies pay for items small and large — ranging from paper for copiers to tires for haul trucks.

“We don’t get the sales tax on stuff they buy,” he said. “Because they’re not buying much anymore.”

Replacement revenues

As Revenue Committee co-chair, it’s Case’s job to consider ways to make up for lost coal revenue.

“That’s a big lift,” he said. “It’s a lot of money.”

True, oil and gas continue to bring Wyoming revenue – but not enough to replace coal. And it’s entirely possible, with market concerns about global climate change, that new restrictions could kill demand for those fossil fuels.

Among proposals before the Joint Revenue Committee:      

  • The committee advanced a proposal in September that would create a corporate income tax of 7 percent on companies with at least 100 shareholders – in other words, businesses not generally headquartered in the state. The revenue created would be around $20 million to $25 million a year, Case said. It’s not a replacement for coal, but a start. A similar measure failed earlier this year in the Legislature.
  • Changes to property taxes, including: An increase in the statewide mill levy for schools, increases in some property taxes, and creating a new property tax class for multi-million dollar homes.
  • Wyoming taxes wind $1 per megawatt hour. Case would like to see it increased. Case would, in general, like to impose an electricity export tax. “Wyoming’s biggest export is electricity,” he said. At this point, there is no bill draft before lawmakers.

Many conservatives have said they want to see cuts to state government before looking to raise taxes.

“Here’s what I tell people: you’ll get your cuts,” Case said. “We’re going to have to cut like crazy. And we’re still going to need revenues. This is very serious. We’ve never faced anything like this.”

Ongoing discussions

The Wyoming Taxpayers Association, which represents many of the companies that would be affected by a corporate income tax, didn’t support the idea in the Legislature earlier this year. Its leadership hasn’t yet decided on its position on the bill currently under consideration, said Ashley Harpstreith, the organization’s executive director.

The Wyoming Taxpayers Association will be discussing the state’s revenue picture at its annual meeting next month. 

“The point is we’re going to have to have those hard conversations,” Harpstreith said. “It’s coming to a head. Industry has been paying the bills for a long time.”

Peterson: A cautionary tale from 27 years of public service

in Column/Education/Government spending
Peterson public service
2000

Ray Peterson served as a state senator for 13 years, from 2005-2018.  In this column, he shares his thoughts on his 27 years of public service.

Public Service

I hesitated to write this article but decided to share my story of public service for only one reason, to better inform our citizens.  This certainly is not done with any self-promoting agenda, as I do not have any future plans to run for any public office.  My 27 years of public service has come to an end.  But I think my story could be used to improve our understanding of the challenges of public service.  Perhaps this article may even convince someone to run for office or volunteer their time or just get involved.

I was first elected to the Cowley town council in 1986.  I served six years and enjoyed the opportunity to learn about town government while offering my input into community projects and working with others.  It was exciting and fulfilling to see a project through, from concept to planning to completion.  

While working on community projects, I was introduced to county concerns.  I had ideas for the county and saw needs that I thought I could help with.  I was elected to the Big Horn County Commission in 1992, where I served eight years dealing with budgets, a new jail, a new dispatch system, improved roads and public land issues.  

State Involvement

I was appointed to the Senate in 2005, where I was appointed to the Appropriations Committee and served for six years.  

After my years on the Appropriations Committee, I was given the assignment to chair the Senate Revenue Committee.  As the Senate president put it, “You’ve seen how we spend the money, now you need to know where it comes from.”   This taught me another valuable lesson in that I realized our Legislature was an institution that trains its own leaders to promote continuity and knowledge to ensure that the best decisions are made on the state’s behalf by our elected representatives.  

I will also mention that the pressure is unreal.  There are no simple votes on the floor of the Senate.  My wife would always notice when I returned home after a session that I had lost both weight and a little more hair.  

My Last Year       

As I gained experience and seniority in the state Senate, more responsibilities were assigned to me.  I was serving on the Management Council, a number of select committees, the Labor and Health Committee and chaired the Senate Revenue Committee.  

Added to this mix was the fact that our revenue projections were down and we were contending with a $1 billion shortfall, which meant that we had lost 25 percent of our projected biennial revenue.  Assignments were made to look for ways we could increase our revenue in Wyoming, which fell squarely on the Revenue Committee.  We were told to bring every revenue generating idea to the Legislature for consideration during the upcoming session.  

We also knew that our expenditures would need to be reduced.  We could not tax our way out of this downturn without looking at reductions to our budget as well.  The assignments were made to form a recalibration committee to look into possible ways we could reduce the education funding model.  I was assigned to that committee.  My summer was spent on  taxation issues and budget cuts to education. 

I remember admonishing our committee to have the courage to bring these tax bills to the floor for consideration, even if it meant that some of us would pay the price politically. I would imagine that most on the committee voted against the proposed revenue bills during the session, but we had done our job in bringing options to the floor.  

Because we had cash reserves, we elected to use them to cover the shortages, which meant no taxing proposal passed that session, but the studies were completed and the information was current for the Legislature to consider, so the Revenue Committee had completed its assignments.

The Recalibration Committee had even a tougher time in meeting deadlines, hiring consultants, gathering information and then making recommendations to the full Legislature during the upcoming session.  

You can imagine the popularity of this committee.  As an example, the business I worked for was boycotted by some schools around the state because of my perceived stance against education. I really didn’t know I had an anti-education stance, but there were a lot of people who thought I and a few others were public enemies to education.  

Articles in the papers that portrayed the Senate wanting to gut education seemed to be the flavor of the day.  But we had a budget to balance and the year before, we had cut the Health Department by almost $100 million, 10 percent of its biennial budget.  Now our attentions were turned to the largest state budget, K-12 education.  

Like the Revenue Committee, the Recalibration Committee completed its job and made recommendations for reductions based on the findings of our contracted consultants.  The committee members were not in total agreement and disagreed on where cuts should be made.  But one thing everyone understood was that cuts to the K-12 funding model were going to be made, it was just a matter of how much.

My Last Session

I was asked to sponsor the bill proposing reductions to the K-12 funding formula. I agreed to sponsor the bill knowing the subject and having spent the summer listening to the consultants and the recommendations.  I also thought that I could use this bill to ensure that my concerns with funding for our smaller schools would be protected.  

I had shared with other senators, over the years, that I felt that the funding model was flawed in favor of the larger schools.  Although this bill would not be a popular bill to sponsor, it would put me in the chair to control the outcome.  My first amendment was to slash $100 million from the proposed funding reduction of $140 million.

The news media continued to refer to the bill as cutting $140 million from our schools up to the day it died in the house.  Although the reporting was not accurate, the bill was now in a form and an amount that I felt our schools could deal with.  The reductions were in areas that would not affect the classroom or salaries or even the quality of our schools in the least.  These reductions were recommended by consultants and would be phased in over three years, just as our school administrators had requested.  

Three small schools stood out as taking larger hits to their budgets than all the other school districts.  Where all other schools were presented with reductions of 2 percent to 2.5 percent over three years, these three smaller schools faced 10 percent to 12 percent reductions. I now had evidence that some of our smaller schools were taking a bigger hit than our larger schools.  

To correct this, my last amendment to the bill was to provide a ceiling that would protect these smaller schools from unfair reductions in comparison to the other schools. I remember sitting down at my computer to check my emails after the  amendment passed on the floor of the Senate. They were pouring in from all over the state telling me how bad a person I was to cut education, but one caught my eye as it was from a superintendent back home telling me that he had sent out a letter to all of his teachers informing them I had broken my promise to the smaller schools and was gutting their district’s money. I, of course, was not happy about the accusations and made every attempt to respond and explain what I was trying to do with this bill, but I’m sure my explanation fell on deaf ears.  

The bill passed the Senate with a proposed $40 million reduction plan over three years and with my amendment.  

The House, meanwhile, had its own reduction bill, which was set cuts at $15 million.  The Senate file was quickly killed in the House Education Committee.  The Senate took the House version and deleted most of the House wording and inserted the Senate file wording and the reduction amount of $40 million. This is what led to the Conference Committee where the House and Senate agreed on a $37 million reduction plan to the K-12 funding formula — $3 million short of my original Senate file but with my amendments intact.  The House was hailed by the media as the saviors of education that session.

I was unseated in the August primary.

My Take on Things  

After the session was over, the Senate president asked If I was going to be all right back home as I was up for re-election.  I told him that I should be okay as I would get back and explain my intentions and work on the bill to the educators back home.  What I was not counting on was that the educators did not want to listen to an explanation and did not attend any of my meetings where I offered a report of the session and the bill that I had worked on.  

Our favorite lobbying group, the Wyoming Education Association, had invested time and money to see that I was unseated.  I don’t really know what it was telling the voters in Senate District 19, but I know it wasn’t the fact that I voted for teacher salary increases each time they were introduced over the previous six years, or that I fought to reinvest general fund money into the teachers’ pension fund after we lost a good portion of it in 2008, or that I voted to increase spending on additional new school construction. 

What the WEA saw in me was a threat.  I had knowledge and education of the budget and the education funding formula as well as the seniority to present and push through legislation that would have threatened their plans for continued increases.  I was asked to be the next Majority Floor Leader in the next session which would have made me president of the Senate in 2021.  I would have also served as the chairman of the Appropriations Committee in 2019-20.  The WEA was going to have none of that.  

Conclusion

Now back to my reason for sharing my story.  I’ve asked myself many times what I might have done differently to ensure my own re-election.  I could have kept my distance from those issues by not accepting those difficult assignments.  But considering all the training and cost of my public service education over the years, I would think that running away from those issues would have been self-serving rather than doing what I was elected and trained to do.  

I remain concerned about what happened and could happen to another public servant.  To allow the media and a union to dictate what we think of a candidate is foolish and dangerous.  The overwhelming problem did not go away with my replacement.

The end result of the 2 percent or $37 million reduction over three years to our K-12 education funding?  Each of the four school districts in Senate District 19 gave raises shortly after the budget session was over.  New school construction and building maintenance continues.  The K-12 education budget continues to grow each year and the WEA continues to be one of, if not the, strongest employee unions in our state.  

We need to be better than this, Wyoming.  Media with an agenda other than fair reporting is dangerous.  Unions that control elections are dangerous.  We should protect openness, transparency, honesty and integrity to our political process.  And certainly, the more knowledge we have, the better we are all served.

Peterson: How to fix Wyoming’s revenue struggles

in Column/Government spending/Taxes
Wyoming Government spending
1902

By R. Ray Peterson, guest column for Cowboy State Daily

While serving in the Wyoming Senate, I had the privilege of serving on both the Appropriations Committee for six years and as chairman of the Senate Revenue Committee for six years.  These two committees deal with the state budget through expenditures and revenues.

As I served, I was able to attend many state and regional meetings as well as review reports, and studies, all while having direct involvement in directing expenditures and revenue streams of our state.  These experiences allowed me insights and knowledge concerning our states budget along with growing concerns of revenue streams and how we will meet the expectations of funding state and local governments into the future.

The most recent developments of our coal industry in Wyoming should be setting off alarms with every elected official and citizen in our state.  Over the years, our state’s natural resources have subsidized a major portion of our taxes or revenue streams that we use to fund our schools and governments.  Over half of all revenues used to meet these expenses come from our mineral extraction industry. 

Learning from our history of our boom and bust cycles, our legislature has wisely put aside additional revenues from the high years to assist us during the low years.  This philosophy has served us well for the past 50 years in providing a more consistent budget, but the times, “they are a changing.”  The question now is, how long before our reserves are depleted?  Will our natural resources come back as they have in the past to save us yet another time? 

Wyoming, by our state’s constitution, must have a balanced budget.  Some would argue that we do not deficit spend in Wyoming while others would argue that we use the reserves to balance the budget which is, in a sense, deficit spending.  From my own simple understanding, when we spend more in a period than we take in, it is deficit spending. 

Although our budget is balanced in the end, we are still spending more than we take in during our low years.  Thanks to our cash reserves or “rainy day” funds and our investments, we seem to be holding our own while hoping that the revenue streams will return to higher levels. 

Today’s challenges are different

But today’s challenges to the budget are different than our past experiences of our boom and bust cycles.  Today, we face the strong possibility that coal will never come back to contribute to our revenues as it once did for our state.  The market has changed.  The demand has changed.  Unlike natural gas and oil, coal was a more consistent contributor to our states revenues with even slight increases from year to year, as amounts extracted increased with what the market demanded. 

But the demand for coal is decreasing for different reasons.  Although Wyoming has stepped up to produce cleaner burning coal technology to protect our coal’s value, other factors have weighed in that have had a dramatic effect on the value of coal. 

The war on coal was real and certainly had its effect.  More power plants have converted from coal fired to natural gas fired power generation.  But more importantly, consumer states of energy, such as California and others, have required energy supply companies to provide evidence that a majority of their power generation portfolio is derived from renewable sources such as hydro, wind and solar, or they will go elsewhere for their energy purchases.  The market is changing and because of this, Wyoming should be prepared and adapt with those changes.

Action is required

There are two principles used when budgeting in a shortfall.  Increase revenues or reduce expenditures.  Wyoming has done both without raising taxes. And there are other good things the state has done and continues to do.  As I mentioned, it participates with private energy corporations in developing clean coal technology as well as other cleaner burning fossil fuel efforts.  It also participates in the effort to develop new markets for our coal.  It has worked to create more transmission lines to deliver our natural gas and oil to market areas. 

These are things our state has done to try and increase or stabilize our revenues by strengthening the current resources we have.  The state has also used excess revenue of the good years to save and invest.  These investments, at times, provide additional revenues that are used to fill the budget holes left from the decreasing value of our market driven resources.  This effort combined with savings, have provided a long-needed stabilizing influence on our past boom and bust budget cycles.

Our challenge today

Our subsidy by mineral taxation has lightened the tax burden on Wyoming citizens over the years, but it has taken a hit, creating a shortfall.  The savings and investment of those savings are currently filling the shortages, allowing our state and local leaders time to make adjustments to their budgets. 

But reserves shrink and investments don’t always perform consistently.  The investment portfolio that perhaps saved our budget the year before could generate nothing the following year.  Trusting our trust funds is not the long-term solution to our shortfall problems. 

Most will argue that we need to reduce our expenditures.  I certainly agree with this position.  As with our own home budgets, we make less, we should spend less.  It should be no different with our state budget and over the last few years the state budget has been reduced in most areas.  But these are all short-term solutions to our current situation. 

What needs to be brought to the table are long-term solutions.  The solutions need to address the real problem of an inconsistent revenue stream, where nearly 60 percent of current revenues collected are market driven or out of our own control.  Wyoming needs to meet the challenge of reducing that market driven 60 percent, to 50 percent or even 40 percent of total revenue collected by the state. 

Now the question should be; How do we do this?

It’s time

By applying the two principles of budgeting in a shortfall of raising revenue and reducing expenses, I’ll offer one revenue increasing idea and two reducing expenditures ideas. 

A good start to the effort of stabilizing our revenue stream would be to pass a bill increasing the statewide lodging tax.   This increase would have the lowest effect on our tax payers and would be consistent to what surrounding states charge.   

For my ideas of reducing expenditures, I would suggest eliminating the $15 million annual automatic escalator for funding K-12 education.  I would also zero base the Department of Education budget and the Department of Health budget every ten years in the appropriations committee.  Stagger them to spread out the work load, but the two largest budgets in our state need more legislative scrutiny. 

These actions would be a good start in stabilizing our budget in Wyoming.

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