With budget, governor, Legislature land on same fiscal page

In a largely disagreement-free process, Gov. Mark Gordon and Wyoming’s Legislature crafted a supplemental budget that socks away a record $1.4 billion in savings while restoring funding to programs that have been whittled by cuts. 

The governor ratified the supplemental budget bill last week and the Legislature voted to override six of Gordon’s 21 line-item vetoes on Wednesday.

“The governor got almost everything he asked for,” Rep. Clark Stith (R-Rock Springs) said about Gordon’s budget requests. 

State revenue officials set the ball in motion last fall when they announced they expected an extra $739 million, primarily from unanticipated coal, oil and gas revenues, over the two-year budgeting period. That was on top of $120.5 million in leftover American Rescue Plan Act funds.

Gordon asked the Legislature to sock away about half of the surplus into savings and investments to prepare for leaner times, and to put the rest toward the state’s most urgent needs. The Legislature’s answer was to save even more than Gordon requested while expanding existing programs and restoring funds cut two years ago as a response to the COVID-19 pandemic. 

“I would like to thank the Legislature for passing a budget that reflects this shared approach,” Gordon wrote in a veto letter, wherein he highlighted two specific choices lawmakers made. First, he applauded that for every dollar of state revenue spent, the supplemental budget saves roughly $3.50. That ratio could change, though not signficantly, as bills with appropriations continue to make their way to the governor’s desk. Gordon also commended lawmakers for approving a state employee pay boost, which will amount to an average 8% raise. 

“These exemplify the balance that is needed in any budget — the balance between the current and future needs of our state and her people,” Gordon wrote. 

Savings

“It is a significant thing, the amount of savings that we have committed to,” Sen. Tara Nethercott (R-Cheyenne) said of the $1.4 billion being squirreled away. “That is something to be proud of.” 

As a Senate Appropriations committee member, Nethercott shared the responsibility of ironing out fiscal differences between the two bodies. The House and the Senate started off with different positions on where to put savings, for example, before compromising to sock away both permanent and reserve savings. 

Gordon asked that roughly $600 million go into permanent savings — a pot of money that cannot be touched by the Legislature, but can provide revenue in the form of earned interest. Ultimately, lawmakers put $735 million into permanent savings, Stith said, splitting that evenly between the Permanent Wyoming Mineral Trust Fund and the Common School Permanent Land Fund. The rest of the $1.4 billion of savings went into reserve accounts. Those accounts earn lower interest than permanent accounts, but remain accessible to the Legislature. 

“The whole game here is to avoid income tax,” Stith said. 

There are good long-term reasons to save money, Sen. Cale Case (R-Lander) said, but the strategy does little to address short-term issues. 

“Putting your money into permanent funds reduces your options to deal with [what happens in] three to five years, and I’m more concerned about the three-to-five years,” Case said. Because mineral prices are commodity-driven, he said, they can collapse just as fast as they went up last year. 

“We’ll be scrambling for funds because the one thing we haven’t done is trim the sails of this big ship to a point where it would function efficiently in a reduced-funding environment,” Case said. 

Spending

While there is more savings than supplemental spending in the budget adjustments, some lawmakers still see areas of profligate expenditures. 

“There was a lot of discretionary stuff,” Wyoming Freedom Caucus Chairman Rep. John Bear (R-Gillette) said, pointing to the Cultural Trust Fund as an example. After lawmakers appropriated $9 million to that account — $1 million more than Gordon had requested — Bear brought an unsuccessful amendment to transfer some of those dollars to the Department of Health, which he called “legitimate government funding” as opposed to funding for arts and humanities.

The amendment was one of 23 brought by the Freedom Caucus to cut spending, all of which either failed or were withdrawn. Without being able to curb spending to its liking, the caucus’ and its newly formed voting bloc opposed the budget on third reading in the House. 

That included Majority Floor Leader Rep. Chip Neiman (R-Hulett), who said he “got chastised for not voting for the budget, because you’re supposed to vote for the budget if you’re in leadership.” Like Bear, Neiman considered a lot of the appropriations to be outside the role of government. 

Those who supported the budget saw the type and degree of spending as necessary given recent years. 

“If there’s a theme there for what I think of as the ongoing spending [it] is to restore the cuts from two years ago,” Stith said. “That’s probably just the big picture-summary of what we’re doing.”

As energy and other revenues plunged in 2020, Wyoming reined in funding, the largest dollar amount coming from the Wyoming Department of Health. 

Those cuts in particular “eroded services for those who are developmentally disabled, who had some traumatic brain injuries, who need assistance to be in their homes and live more fulfilling lives,” Rep. Trey Sherwood (D-Laramie) said. Lawmakers refilled the Wyoming Home Services program with $7 million, along with funds intended to improve Medicaid reimbursement rates for dentists who treat the 40,000 Wyoming children covered by the federal program. Dentists had started to drop out of the program when reimbursement rates were cut two years ago, Stith said. 

If there was something that Sherwood wished had gone differently in the budget, it was funding for affordable housing. The governor had asked for $15 million, but lawmakers settled on $10 million. To Sherwood’s knowledge, an appropriation of that kind was new territory for the Legislature, so “it’s a win because it’s a first.” 

“I think that is something that every one of our communities is struggling with,” Sherwood said. Whether that’s workforce housing, senior housing or young families struggling to get into starter homes, Sherwood said, “we as a state need to take a more progressive role in being a partner with local government to solve those issues.”

Sherwood was also happy to see increased employee compensation. State employees will get salary increases starting July 1, although about $4 million dollars short of what Gordon asked for to address long-standing recruitment and retention issues. The governor had originally asked for an April 1 effective date, but lawmakers pushed that back to line up with the start of the next fiscal year. The increase will get employees to about 90% of market rate, Stith said. 

“The decision to increase employee compensation is not an easy one, because it’s an exponential cost,” Nethercott said, pointing to its ongoing nature and the increased cost of benefits that come with a raise. However, it was critical since state employees “had worked for the people of Wyoming through very difficult times,” she said. 

That also motivated the Legislature to generously fund education, Stith said. 

“It’s kind of difficult in a year when you have almost a $2 billion surplus to say to the schools, ‘Oh, you don’t get anything,’” Stith said. Instead the Legislature put $70 million toward what’s known as the external cost adjustment, which can be used to boost teacher salaries. Additionally, $129 million will go to school construction and maintenance. 

Push and pull 

Before signing the budget supplement — a bill passed in odd-numbered years intended to address urgent needs that cannot wait for the primary two-year budget which is passed in even-numbered years — Gordon used his executive power to issue 21 line-item vetoes. 

“My vetoes represent honest disagreements on a few details and in no way detract from the Legislature’s hard work and its collective efforts to put a solid and clean budget on my desk worthy of the Governor’s signature,” Gordon wrote. 

Lawmakers accepted the vast majority of those objections, including one to free up an additional $5 million for the property tax refund program, which reimburses qualified residents for some of their property taxes. To address soaring rates, lawmakers passed additional legislation to fund the existing program and to expand eligibility in order to assist more residents.

Gordon called it “one of the most beneficial acts of this session.” 

The Legislature’s six overrides were small technical fixes, Stith said. 

That push and pull over technicalities was the nature of most of the vetoes and veto-overrides, Sherwood said. Budget footnotes may provide transparency to the public and lawmakers alike, Sherwood said, but she also understands how that might impede on the governor. 

“It’s a very delicate balance between the two branches,” Sherwood said. “Because we are here to appropriate, and we would like the intention of our appropriation to be documented,” but that might result in the body being overly prescriptive.  

Overall, a smooth and prompt budget work was a “a beacon of light of how the [legislative] process can actually work in a very functional way,” Sherwood said. Both she and Nethercott said it bodes well for the 2024 budget session where the process will begin anew.