Following a budget blow up between the leadership of Wyoming’s House and Senate last week, Gov. Mark Gordon called on lawmakers to avoid head-butting and move Wyoming forward.
“We really have an opportunity to make some choices and embark on some new paths and I’m anxious to see that happen,” Gordon said in an interview with WyoFile. “That isn’t [done] by running into each other. That is [done] by finding a common direction and getting a good path forward.”
Just one month into his administration, Gordon has played a low-key role in his first legislative session as governor. He’s kept up talks with legislative leadership and breakfasted with different groups of lawmakers, he said. The governor described himself as confident the chambers will reconcile their budget differences without great interference from him.
But in the interview at his office in the temporary Capitol building on Friday, Gordon said Wyoming citizens want more out of their lawmakers than a Senate leadership suggestion that the supplemental budget could fail. He also voiced interest in a proposed corporate tax, called on lawmakers to act on education funding “with some consequence” and said his administration would “dive into” finding a solution to pay for public schools.
Finally, Gordon called for full funding of two tribal liaison positions, a perennial legislative fight. The Senate has called for funding just one state liaison for the two tribes in Wyoming, the Eastern Shoshone and the Northern Arapaho. Two distinct, sovereign tribes merit two liaisons, the new governor said.
Senators last week suspended their rules to introduce four new budget bills — an unusual and high-stakes maneuver that legislative observers said could derail reconciliation between the chambers. The state is midway through its two-year budget this legislative session, meaning lawmakers are voting on budget adjustments that agencies or the governor thinks they need before next year. The four new bills were designed to ensure some areas of concern to senators will be funded if the overall supplementary budget bill fails.
Gordon suggested such a result would be disappointing to him and to Wyoming residents.
“I think we could do better work,” he said. “I think the people of Wyoming want better work.”
Senate leaders have backed away from some of the strong statements made last week about shooting down the budget bill. On Wednesday Senate Appropriations Chairman and former Senate President Eli Bebout (R-Riverton) told WyoFile he would not support the current budget bill. By Friday morning House and Senate leaders were saying a compromise was not far off.
But the two chambers remain far apart on the budget for general government, and are once again poised for a fight over education funding — this time over just $9 million.
Lawmakers entered the session considering an external cost adjustment (ECA) for schools, a measure to help education funding keep up with inflation and increases in the cost of goods by providing more money for teachers’ salaries and other budget drivers.
Leading into the session, the Legislature’s Joint Education Committee and Joint Appropriations Committee both set the external cost adjustment at $18 million. Since then, the House and Senate have diverged. The Senate moved to cut $9 million from the ECA, and the House countered by boosting it to $37 million.
Gordon called on lawmakers to pass the external cost adjustment in his State of the State speech in the session’s opening days.
On Friday, he declined to say whether a $9 million ECA would satisfy him. “There are a lot of moving pieces in the negotiations and so I’m going to resist being definitive about those,” he said. “I think there is probably more progress that can be made on that.”
Hanging in the balance over the ECA fight is a possible lawsuit between the state and school districts that feel lawmakers haven’t met constitutional requirements for education funding. Gordon appeared ambivalent about the possibility.
The state needs to understand what its education “obligations are going to be going forward,” he said. “Will those obligations be informed by another lawsuit, I don’t know. But they could be.”
“There seem to be a couple schools of thoughts,” about a lawsuit over education funding, Gordon said: “‘Oh my lord what are we going to do if we get sued?’ and ‘Oh my lord, maybe that’s the best thing that can happen because then we all face reality.’ I don’t have an opinion either way.”
But Gordon called on lawmakers to recognize that good public education is essential to moving Wyoming toward a more diversified economy.
“Certainly one of the things that we talk about a lot is our skilled workforce,” he said. “We don’t have enough” skilled workers. “What’s going to make a worker come here and stick? It’s going to be raising a family, loving the place and getting your kids well educated. These are things that people have to recognize.”
“I don’t think you can cut your way to prosperity,” Gordon said.
The external cost adjustment is just the latest front in a longer-running war over how much the Legislature should and will provide to public schools.
For two years, lawmakers have fought over but failed to definitively find a solution for funding. Progress was made last year to divert some existing funding streams towards schools. Still, lawmakers entered this session knowing education funding continued to face a $200 million to $300 million deficit, given current statutes for allotting Wyoming’s tax revenue.
As state treasurer, Gordon watched the debate over education funding play out. “My hope is that … comes to some consequence [and] we make a decision on where we land,” he said.
This session, a proposed corporate income tax on large out-of-state corporations could raise money for schools. The House and Senate budgets also contain differences on certain revenue diversions House members want to see directed towards education funding.
The House wants to divert surplus funds to the public schools — revenues above what is needed for the current budget for all other state operations. The amount is around $200 million, depending on which chamber’s budget you consider.
The Senate wants to keep the money in the state’s General Fund and spend it once the next budget is set for school spending. “It’s more transparent,” Senate President Drew Perkins (R-Casper) said. “That way people understand that it came from the General Fund and it’s going to pay for schools and when you do that there’s going to be less money … to pay for other things.”
The Senate strategy sets the stage for yet more debate over the cost of education next session.
“There will always be a fight over [education] funding,” Perkins said. The state can’t fix education funding by taking money from other areas of government, he said.
And there could always be another oil boom to save lawmakers from hard choices.
“I don’t know what will happen next year,” Perkins said. “If a shooting war started in the Middle East, we’d have huge surpluses.”
But Gordon wants to see an end to the years of heated debate, he said. “I’d like to see movement on it, yeah,” he said. “Let’s fix it.”
Gordon intrigued by proposed corporate income tax
After Speaker of the House Steve Harshman (R-Casper) held back bills to raise the property tax and broaden the sales tax, only one major revenue raiser for schools remains on the table. An income tax on large, out-of-state corporations like Wal-Mart could raise $45 million a year or more, with the revenues currently slated to education. That latter provision could see changes in the Senate.
Proponents of House Bill 220 – National Retail Fairness Act say it will capture money that Wyoming residents are paying on goods to help corporations pay income taxes in other states. The bill will not affect Wyoming residents, they argue.
The proposed tax faces a close vote in the Senate but “has a pretty decent chance,” Perkins said. The budget debate could affect how some senators vote, he said, noting they want to see cuts made to spending.
“You can’t sit there and have a large spending bill … and then raise taxes at the same time.”
Gordon is interested in the bill, he said, though he stopped short of ruling on its fate if it reaches his desk. “It is an honest effort at looking at how to capture revenue that is already being expended outside of the state,” he said.
Since the bill’s late introduction in the House, national anti-tax writers have rained opprobrium down on the heads of Wyoming’s lawmakers. The group Americans for Tax Reform has taken web ads on the Casper Star-Tribune website. In a column for Forbes, a writer for the group compared Wyoming Republicans to California Democrats. Founded by Republican strategist Grover Norquist, Americans for Tax Reform is funded by corporate policy groups interested in low taxes and diminished regulatory environments.
A writer for the Tax Foundation, a right-leaning think tank that studies taxes, said the proposed tax would drop Wyoming from first place to third on the group’s State Business Tax Climate Index.
“That’s still pretty high,” Gordon said. Although Wyoming has a good rating for its competitive tax structure, questions have been raised about the state’s fiscal sustainability, he said. Those concerns could also impact a business’ decision-making if it looked like it would lead to future tax hikes.
“If I were looking to locate a business, I would want to be in a state where I knew that my taxes were not likely to be raised because I could see that the state has a sustainable fiscal future,” he said.
House Bill 220 won’t fix the problem, Gordon said, but “this may be a component of it. I haven’t finally made up my mind.”
On tribal liaisons
Among the differences between the House and Senate budgets is a seemingly minor one in terms of dollar value, but one Gordon says could have consequences for the governor’s office. For the last several years, lawmakers have quibbled over whether to fully fund tribal liaisons in the governor’s office. The positions are state employees who maintain communication between Wyoming’s two sovereign tribal governments and the state.
Since last year, the state has paid for just one tribal liaison, though there are two tribal governments, the Northern Arapaho and Eastern Shoshone.
This year, the Joint Appropriations Committee voted to fully fund the two positions at the urging of Rep. Lloyd Larsen (R-Lander), a House Appropriations member and chairman of the Select Committee on Tribal Relations.
The JAC proposed funding of $280,000 for two liaisons. A $120,000 reduction of the appropriation was successfully proposed by Bebout, one of two senators from Fremont County, home of the Wind River Indian Reservation.
Gordon’s office has not yet hired a tribal liaison, but the new governor said he wants the money for two. “Each tribe has its own distinct history and personality,” he said. “I have pledged to be accessible to both nations and really look to work together as we solve issues.”
“Those positions are very important,” Gordon said. “In talking to former governors, they’ve all talked about the value of those.”