In Wyoming, we are blessed to have critical services like public safety, roads and education largely funded by the state’s vast natural resources. In large part thanks to the mineral industry, as well as agriculture and tourism, Wyoming has for generations sustained its economic engine, providing an attractive lifestyle with more expendable individual income and choices, aligning with our independent values and appreciation of limited government interference.
In fact, this allows the average Wyoming citizen to have one of the lowest tax burdens in the nation. According to the Wyoming Economic Analysis Division, an average family of three, with an income of $65,000 and a home valued at $270,000, contributes $3,770 in state taxes through sales, excise and property taxes while receiving nearly $28,280 in critical state services through county, city, special districts, K-12 education and state services. And yes, while Wyoming individuals and businesses, including mineral companies, do bear the burden in sending $6.4 billion to the federal government in taxes, $7 billion is returned to the state through payments for services such as payroll, matching highway dollars and support of parks and federal lands.
This tax structure has served the average individual in Wyoming well, but it all comes at a risk. We know from experience that relying heavily on revenue from price-dependent commodities is volatile and uncertain. However, the discussion of balancing or diversifying our tax structure becomes a broken record when elected officials exercise the foresight of saving just enough until the cyclical nature of prices bounce back. For decades, Wyoming has had the ability to survive in times when the market is down by utilizing our savings, otherwise known as “rainy day funds,” until revenues are back in the black.
When the 66th Legislature convenes for the 2022 Budget Session they will be faced with the constitutional requirements of adopting a balanced budget for the 2023 – 2024 biennium. Along with the regular budget business, the governor and Legislature will also continue to oversee the significant influx of federal funding. The state is set to receive $1 billion in flexible funds from the American Rescue Plan Act that will be appropriated as directed from the Legislature and governor. This is just part of the $8-billion package the state has received in total from the ARPA and CARES Act federal funding.
Make no mistake, these funds are not created through economic activity. Not only will they not bounce back after they are gone like oil prices, they will likely pass a burden on to future generations. This makes it even more important to invest in immediate crisis-related needs and be thoughtful with the remainder to ensure benefits are long-term not short-sighted. We cannot view these funds as yet another up-cycle in our traditional commodities. Not only must the Legislature use the same conservative saving approach as their predecessors, but they must do so all the more. Federal funds are not the answer to balancing our tax structure.
We encourage our policy makers to invest these funds in such a way that does not obligate future citizens or legislatures with the burden of paying for future ongoing costs. Wyoming should treat federal stimulus dollars more carefully than it treats its own budget. Wyoming does not act like the federal government and nor should it. Wyoming has always paid our bills and does not rack up an endless debt for our grandchildren and generations to come.