Fixing Wyo’s historic deficit is worth another week’s work

When the Legislature adjourned its two-day special session in mid-May, House Speaker Steve Harshman and Senate President Drew Perkins advised lawmakers to prepare to come back for five more days in late June.

But a month later, the leaders — both Casper Republicans — abruptly abandoned that plan, saying more work to address the double whammy of COVID-19 and drastically reduced mineral tax revenues wasn’t immediately needed after all.

What seemed a curious decision at the time now appears to be a monumentally wasted opportunity.

Yes, the Legislature’s May 15-16 marathon special session — the state’s first since 2004 — accomplished what it set out to do. Lawmakers passed three bills that provided legislative directives to Gov. Mark Gordon for spending the $1.25 billion federal CARES Act funds sent to Wyoming.

But a huge amount of heavy lifting was still needed to address the more than $1 billion estimated shortfall for the 2021-22 biennium. The amount includes a half-billion dollar deficit in education funding, which is separate from the total General Fund budget recommendations the governor will make in December.

Five days of work in June could have made a big difference in how Wyoming solves the worst budget deficit in the state’s history. 

Everyone knows how tax averse the Legislature is, with many lawmakers staking their political careers on pledges to never vote for any tax increases or new taxes. But it should be abundantly clear by now that there is no way Wyoming is going to simply cut its way out of the current fiscal mess, nor would it make sense to spend all of its “rainy day” reserve fund to get by for the next two years.

Every year the Joint Revenue Committee is asked to find new sources of money to balance the budget, and every year almost every idea the panel sponsors gets batted down by either the House or Senate. 

The Legislature had several options it could have considered during a second special session, including a corporate income tax, Medicaid expansion, property- and sales-tax hikes and the removal of sales-tax exemptions on industries and services.

A penny increase in the state sales tax, from 4 cents to 5 cents per dollar, would raise an estimated $300 million per biennium. It would erase more than one-quarter of the state’s non-education budget shortfall, and reduce the need for draconian cuts lawmakers will otherwise have to implement.

Perhaps the bill could have gotten some traction during a special session, with a handful of key lawmakers who decided not to seek re-election freed up to support a tax measure without putting their necks on the political chopping block. 

Instead, Joint Revenue killed the sales tax proposal at its Aug. 25 meeting, along with rejecting or tabling all of the panel’s other revenue-generating bills. Maybe committee members just got sick and tired of seeing all the work they put into each session summarily dismissed, so they cleared the deck themselves.

When he and Perkins announced in June that a second special session wasn’t needed, Harshman suggested the convening would be premature since the governor’s proposed budget cuts wouldn’t be on the table until later in the year.

But Gordon had already announced that he had directed state department heads to prepare 10% budget cuts — a total of $250 million — and warned that an additional 20% reduction might be implemented later. 

It doesn’t take a crystal ball to realize that the implications of such drastic cuts to state government services will be enormous. Developing a conceptual game plan early was imperative, and could have resulted in a politically viable mix of cuts, revenue generation and spending of savings that headed off the worst of what’s to come.

Late June, nearly two months before the Aug. 18 primary election, would have been an ideal time to hammer out a workable fiscal plan that forced lawmakers to finally get serious about tax proposals. Now, there’s no chance legislators will want to meet before or after the Nov. 3 general election. Time has run out for this year.

On Aug. 26, Gordon announced he has accepted the initial round of approximately 10% budget cuts to agencies, boards, commissions and higher education, which he called “devastating.” It’s an apt description, and he warned that “it’s just the tip of the iceberg.”

“These [cuts] hurt, and what comes next hurts more,” Gordon said. “I recognize the impact these cuts will have on Wyoming families and I am truly saddened that we had to make them.”

The largest budget reduction is to the Department of Health at $90 million. The bloodletting will reduce or eliminate vital programs that serve senior citizens, disabled individuals, people with mental illnesses and drug addictions and low-income residents. Just three years ago DOH had to cut an equal amount from its budget, and it’s still reeling from those losses.

In addition to the reduced state funds, the Health Department will forfeit an estimated $49 million in federal matching funds for 2021-22. Many of the DOH programs are operated by providers who will be forced to cut or totally eliminate private-sector jobs, doing even more damage to local economies.

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When executive branch agencies are cut past the bone, the public generally lets the governor and legislators know which reductions are the most egregious. Because of that, some valuable programs are usually spared during budget deliberations.

But when it comes to funding public schools, the Legislature doesn’t have the luxury of relying on its own collective wisdom to determine the proper level of spending. In a series of rulings dating back to 1995, the Wyoming Supreme Court said the state has a constitutional mandate to provide every student a quality education.

The Senate threatens every year to take a rusty axe to school funding. But in recent sessions, the House has forced the upper chamber to compromise on less drastic cuts to avoid lawsuits from school districts eager to test the state’s budget decisions in court.

A special session devoted to finding a way to make up the $500 million school funding shortfall could have given the Legislature a head start, but it squandered that chance, too.

Make no mistake, I dreaded the idea of spending a week watching the state’s 90 solons conduct even more of their business on Zoom. I don’t imagine many regular observers of the Legislature’s laborious law-making machinery are ever anxious to see it go into overtime.

After all, the 16-hour first day of the Senate’s special session in May was enough to induce a massive headache. After day two wrapped up, I was batty enough to just fast-forward through the House version of events.

But I would have gladly sacrificed my mental well-being if the state had decided to tackle its fiscal problems early, and not leave everything to the whims and vagaries of a general session. Trying to find $1 billion is a herculean task for any Legislature. Even if Wyoming had used five more summer days simply getting its ducks in a row for next year’s budget battles, it would have been time and money well spent.