Look beyond budget cuts to boost economy

I won’t rule out any surprises for the upcoming budget session, but it’s already starting to look familiar with legislators relying on their tired old bag of tricks to make the state’s ledger balance.

Which means most of them will gather in Cheyenne unwilling to consider any new taxes or tax increases, even though logic dictates that Wyoming must make up for the steady decline of severance tax revenues.

Gov. Mark Gordon’s proposed state budget charts a course similar to what came out of recent legislative sessions — using savings to keep Wyoming above water through 2022. He’s added a new wrinkle though, tapping the state’s “rainy day fund” solely for education ($161 million) and local governments ($105 million).

That would still leave $1.3 billion in the account, which is a healthy sum. I commend legislators like House Speaker Steve Harshman (R-Casper) for building up the fund, but I’m glad their obsession with socking away every available dollar came to an end a few years ago when they finally acknowledged that it was raining.

Gordon, fortunately, has ended the practice of his predecessor, Matt Mead, who mandated that state agencies make across-the-board cuts. That approach may spread the pain around, but it makes better sense to give department heads the flexibility to decide what reductions are necessary while still providing essential services.

That doesn’t mean, though, that the freshman governor is a free spender. Gordon declined to fund 127 positions requested by state agencies. He also cut the state’s capital construction budget by about $55 million.

In fact, there’s only $23.5 million in Gordon’s budget available for new spending by state agencies, the judicial branch and higher education. That’s a paltry portion of a $3.1 billion, two-year budget.

While the governor focused on improved mental health services in his 2018 campaign, he made the tough decision this time around to deny a $25 million request for long-term mental health care. Gordon said it’s up to the Legislature, not him, to find the funds through either new revenues or cuts to other programs.

Last week Gordon told the Joint Appropriations Committee the only new revenue measure he could support is a statewide lodging tax. That’s disappointing.  Not only is it unlikely to pass, but several other tax options should be on the table.

The House approved a unique lodging tax bill last session. For the first time after many failed attempts, the tourism and hospitality industry supported it. It would have raised $19 million, with 80% going directly to the state’s Tourism Division.

The Senate killed the bill on the last day, and I don’t see any reason to think it will garner additional support in the notoriously tax-adverse chamber in 2020.

The Joint Interim Revenue Committee rejected a property tax hike last month, and the so-called “sin tax” increases on alcohol and cigarettes didn’t survive the panel either.

The committee will sponsor a 7% corporate income tax bill that has been revised since a similar measure was killed last session in the Senate.The previous bill faced vigorous opposition by corporate lobbyists; Senate Corporations Chairman Bill Landen (R-Casper) decided not to even take a vote, saying he knew the full Senate would never approve it. 

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The corporate income tax bill, however, is precisely the kind of revenue legislation that the state should pass. Huge retail chains like Wal-Mart and national restaurant franchises like Applebee’s and McDonald’s are currently let off the hook, with all their Wyoming profits sent to out-of-state company headquarters — where they’re taxed anyway.

Opponents maintain that the tax would force corporations to close stores in Wyoming and lay off workers, which is patently ridiculous. The prices they charge are uniform nationwide, and in the vast majority of states a corporate income tax is simply the cost of doing business.

An individual income tax would also be a progressive move if the rate reflected the massive inequities between the extremely rich, the middle class and Wyoming’s poorest citizens. Such a tax would force the state’s top income-earners to pay their fair share. With state constitutionally mandated tax credits for sales and property taxes, no one earning less than $50,000 annually would pay any state income tax at all.

The move could generate hundreds of millions of dollars annually and help end the boom-and-bust cycle of the minerals extraction industry that Wyoming has ridden for decades. But any chance of the Republican-controlled Legislature even considering it is nil.

So, if the Legislature is unlikely to pass any tax bills, and state budget experts are correct in their October estimate that Wyoming’s revenues may decline by an additional $135 million over the next three years, what’s left to consider?

I wouldn’t have predicted this a year ago — frankly I had given up hope Wyoming would ever expand Medicaid — but I think the current perfect storm of revenue needs could finally open that door.

The Legislature has rejected expanding the program for seven years, flushing an estimated $840 million in federal funds down the drain and punishing more than 19,000 low-income workers who can’t afford health insurance.

It was one of the Legislature’s all-time foolish decisions, made because Wyoming Republican lawmakers couldn’t swallow their pride and play ball with former President Barack Obama’s Affordable Care Act. Legislators hid behind the lame excuse that the federal government couldn’t be trusted to fulfill its promise to pay at least 90% of Medicaid expansion’s costs.

I don’t expect these same lawmakers to eat crow and admit they were wrong, nor do I want them to. However, it’s high time they recognize the harsh reality of Wyoming’s budget situation and make a smart move.

The state’s coal industry has seen a 35% decline in production over the past decade, and it isn’t coming back.

Medicaid expansion would annually pump $120 million in federal funds into the state’s economy. It would also improve the bottom line of hospitals whose uncompensated care costs total more than $100 million per year.

I realize Gordon isn’t a Medicaid expansion supporter, but neither was Mead early in his first term. It took a few years, but Mead eventually came around. Before long he was begging fellow Republicans to approve it. His pleas were rejected. 

Now I fear we could face the inverse problem. Expansion could finally clear the once-seemingly-insurmountable legislative hurdle only to die by Gordon’s veto. 

“Additional spending cuts, I do believe, will be on the horizon,” Gordon told reporters when he presented his budget last month.

Yes, they undoubtedly will if we keep losing revenues and do nothing to replace them. But if legislators and the governor are willing to explore the combination of Medicaid expansion and a reasonable tax on corporate profits, Wyoming won’t always have to resort to its rainy day fund and budget cuts to bail itself out.