State agencies pain over budget cuts due to low energy prices

About twice the usual number of faculty resigned from the University of Wyoming last spring.

University President Tom Buchanan told the Wyoming Legislature’s Joint Appropriations Committee last week that about 45 tenure-track faculty members left — 21 lost to other universities.

“We have made substantial progress over the past decade,” Buchanan said, in building UW’s instructional and research faculty and upgrading facilities.

And while he cannot say that budget cuts are responsible for the higher than usual number of departures, Buchanan fears the University may lose momentum by cutting its budget by $15.6 million to meet the 8-percent reduction that the governor is requesting of most state agencies.

“It certainly would be in our interest and our intent on all of these (reductions) to minimize the impact on instructional quality throughout the university,” Buchanan said, “but I have to tell you that in 2010 when we absorbed the 10-percent reduction under the Freudenthal administration we really did capture most of our low hanging fruit.”

Every part of the University will feel the pain, Buchanan said, and core services of research and instruction will be affected.

During a press conference on Monday, Gov. Matt Mead offered a slice of optimism, suggesting that if the forecast for natural gas prices increases enough, he would happily ease back on the 8 percent cuts.

“We can go backwards,” Mead said. “If it’s going to be 7 percent or 4 percent, we’re going to be well-prepared.”

Longing for a boom but expecting a bust

While Wyoming finished the fiscal year July 1 with a $130 million general fund surplus, Don Richards, the budget manager for the Legislative Service Office, told the Appropriations Committee that the state may still face a deficit next year.

The surplus came from unanticipated income on investments from mineral royalty money and coal lease sales.

Wyoming state government revenue swells or shrinks along with the profits of the energy industry. With natural gas and coal prices expected to remain low for years to come, Richards said, the state must be cautious about spending.

As energy prices — particularly natural gas — fell following the Great Recession of 2008, former Gov. Dave Freudenthal had agency administrators submit 10 percent budget cuts in 2010 that for the most part have become part of standard budget.

Though Freudenthal was a Democrat and current Gov. Matt Mead is a Republican, their approach has been the same. Both preferred cutting budgets to dipping into state savings accounts or channeling some of the money that statutorily flows to the Permanent Mineral Trust Fund into the general fund.

Wyoming has $1.5 billion in the Legislative Stabilization Reserve Account. The $5 billion in the Permanent Mineral Trust Fund is built on an automatic flow of 2.5 percent of severance taxes. Mead said in an April press conference that no one knows how long natural gas and coal prices will be low. So pulling money from savings is unsustainable. So this spring, Mead asked state agencies to provide plans for an 8 percent reduction in spending.

All of the agencies that went before the Appropriations and other committees last week said that the easy cuts were made during the Freudenthal years. This round of cuts is more painful.

Close a park?

Meanwhile, in a Joint Travel, Recreation, Wildlife and Cultural Resources Interim Committee meeting on Wednesday, Rep. Cathy Connolly (D-Laramie) proposed closing Hot Springs State Park.

She fears that further budget cuts could mean shabby state parks without visitor amenities and a lack of money for grants to encourage arts and culture, which are administered by the same agency. Closing one park could provide money for other services of the State Parks and Cultural Resources Department, she suggested.

Other committee members said the ramifications of such a bold move need to be thoroughly analyzed, though Rep. Jonathan Botten (R-Sheridan) agreed with Connolly that the agency’s proposed cuts were “draconian with a capital D.”

Committee co-chairman Rep. Del McOmie (R-Lander) said the suggestion and motion made by Connolly to close Hot Springs State Park was premature. The far-reaching ramifications and logistics of that kind of decision need to be evaluated before the full committee can make that kind of recommendation, he said.

In another meeting, Wyoming Supreme Court Chief Justice Marilyn Kite told the Legislature’s Joint Judicial Interim Committee that personnel cuts could harm the judicial branch’s constitutional mandate to guarantee access to the courts.

“Our workload studies, updated annually and closely monitored by the Supreme Court, demonstrate we are operating under lean conditions already, and reductions in staff could have drastic consequences on the delivery of justice,” Kite wrote in a letter to the committee.

A 4 percent reduction in salaries would result in cutting more than seven in the Supreme and Circuit Courts and at least half of the time for a position in every district court, Kite wrote.

Nonetheless, Kite set out proposed cuts saying the judicial branch wants to do its part to bring down budget spending like all other branches of state government.

High anxiety under the golden dome

Anxiety about the state budget was palatable at the meetings on state Capitol grounds over the past week. But there will be much more debate and hand wringing before the Legislature and the governor make budget adjustments final during this winter’s session.

The anxiety has made the process more open than the normal annual procedure, however. The governor usually meets with agency representatives in private then delivers a proposed spending plan to the Joint Appropriations Committee.

The committee “marks up” the proposed budget, meeting publicly with agency representatives to create a budget bill that goes to the entire Legislature for debate. When passed by the Legislature, the budget bill goes to the governor for his signature. He has the ability to veto parts or the entire bill.

House Appropriations Committee Chairwoman Rep. Rosie Berger (R-Big Horn) said that process will still play out, but the additional steps give lawmakers and the public an opportunity to review and express concerns and suggestions early on.

Serious priority decisions

The UW budget reductions demonstrate the type of dilemmas that all state entities face in budget cutting, and for state lawmakers the task forces them to put their priorities into action and face the consequences. For example, cuts to health-care instructional and residency programs ultimately can lead to more uninsured Wyomingites in hospital emergency rooms, which costs taxpayers more than the programs, Buchanan said.

The proposed budget reductions presented by the agencies are here. Proposed reductions to Supreme and Circuit Court budgets are here.

There are also political tensions to overcome.

Mary Kay Hill, education policy adviser to Gov. Mead, said there has been tension between the governor’s office and the Department of Education since a new process for approving department spending has been implemented.

Legislators took the unusual step this spring of requiring Mead’s office to certify that the Department of Education was following state law in its spending for accountability programs. Superintendent of Public Instruction Cindy Hill, an elected official, transferred more than $200,000 without legislative approval last year to create a teacher training program. (Mary Kay Hill and Cindy Hill are not related.)

That sparked Sen. Phil Nicholas (R-Laramie), co-chairman of the Joint Appropriations Committee, to bring forward the language requiring the governor’s oversight of Department of Education spending because the Legislature has exclusive authority to fund new programs. The superintendent also had a dispute with Sen. Hank Coe, a Republican from Cody, on a radio show last month about accountability and spending issues.

Nicholas said last week he hopes “everybody (will) take a step back” to work through the issues.

Even the wildlife

Wyoming wildlife will also be affected by the current round of state budget cuts. Richard Reynders, chief fiscal officer for Wyoming Game and Fish Departpment, said two programs important to wildlife health will see less funding over the next fiscal year.

Wyoming G&F will significantly reduce its monitoring of chronic wasting disease among elk and deer and focus on hot spots, due to loss of a federal grant as well as the 8 percent budget reduction request. Mapping and data collection for sage grouse protection has been slowed by delays or reductions in federal funding. So state wildlife officials will put off spending on habitat monitoring and a planned project evaluation until next year.

Wyoming has been trying to create a sage grouse protection program that will prevent federal regulators from listing the bird as an endangered species. A listing brings federal protections that affect land use, particularly by the mining and agriculture industries.

“We are very well aware of the priority that sage grouse is to the state,” said Scott Talbott, Wyoming G&F director. So the elimination of the projects is temporary.

In the end, most testimony from agency administrators came down to people — salaries and retaining the best employees.

As Buchanan said, “At our very core what you need is great faculty teaching great students.”

— Editor’s note: This story was updated on August 10, 2012, to clarify the source of tensions between the governor’s office and the Department of Education.

— Bill McCarthy is a freelance writer who lives in Cheyenne.

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