Wyoming can make up budget shortfall without panicking

(Opinion column) — With energy prices and tax revenues falling, Gov. Matt Mead has estimated a ballpark figure of a $100 million to $200 million state budget shortfall during the next year.

That’s a pretty big ballpark. In past years, slicing that much out of the state’s budget has been met with panic by state lawmakers and resulted in ill-conceived across-the-board cuts. It’s a problem we must be concerned about, but dealing with the shortfall should be manageable if Wyoming looks at all of its potential revenue sources and uses them wisely.

There’s a lot of money at the state’s disposal, beginning with the $1.8 billion rainy day account, officially known as the Legislative Stabilization Reserve Account (LSRA).

I can already hear shouts from many Republican lawmakers who insist Wyoming must have at least $3.5 billion in the account to fully cover two years worth of the state government’s operating expenses. They never admit that it’s “raining” for state and local governments, and the problem is compounded by the state having no laws at all about how much money should be in the LSRA or how it should be spent.

Defining those key elements of the state’s savings strategy should be a major priority for legislators during the budget session in February. The state can’t afford to keep guessing about how much it needs to sock away for emergency expenses or argue every year about when it’s appropriate to tap the account.

Wyoming’s GOP governor has set the right tone for the talks about using this reserve fund to deal with the predicted shortfall. Doing so puts Mead at odds with some savings stalwarts in his own party, and I disagree about some of his stated priorities for using the money. But at least he’s showing leadership in the essential effort to convince lawmakers that it is indeed raining.

At a press conference earlier this month, Mead said one of his December 1 budget recommendations to the Legislature will be to continue to allocated state funds to city and county governments. He’s right, this isn’t the time for the state to take any money away from these entities.

There’s no justifiable reason at this point to try to balance the budget on the backs of cities, towns and counties. The state’s current allocation for local governments is $175 million, and they can use every penny of it. Some of their needs include unfunded mandates they were given by legislators.

Mead is also correct in declaring that state construction projects shouldn’t come to a complete stop. Fixing and improving our infrastructure, especially transportation projects, help the economy and do not delay necessary work that would cost more in future years.

The largest and easiest fix for our budget woes is also the most contentious — Medicaid expansion. After a few years of opposing the move because of his extreme dislike of the Affordable Care Act, or “Obamacare,” Mead decided he wanted to expand it last year. He was met with stubborn resistance from the vast majority of GOP lawmakers who wouldn’t do it no matter how beneficial it would be for Wyoming citizens.

I’ve just about given up pushing Medicaid expansion for health and humanitarian reasons. The GOP legislative leadership has demonstrated time and again it absolutely does not care that the expansion would provide health insurance for an estimated 17,600 of Wyoming’s working poor.

But for purely economic reasons, legislators should finally see the wisdom of expanding Medicaid. Lawmakers missed the chance to have the program completely funded by the federal government for the first three years, but the state would still only pay 10 percent of the cost after 2020.

Will legislators really contend again that spending a dime out of every dollar to expand a health program is a bad or dangerous deal? Wyoming pays 50 percent of the costs for traditional Medicaid now. The state would get between $50 million and $120 million annually from expansion (another big ballpark) that won’t have to be spent on other medical services the state pays for now. Even at the low end, that’s a $100 million gain for the biennium.

Republicans have literally run out of excuses to oppose Medicaid expansion. They will always hate Obamacare, but it’s not going away no matter who is elected president next year. Throwing 17 million Americans off the health insurance rolls would be political suicide. Even presidential candidates who want to deport 12 million illegal Mexican immigrants can see that.

Mead has asked the Wyoming Department of Health to plan two budgets: one with Medicaid expansion and one without. If legislators actually listen to state health experts — which doesn’t seem like too much to ask — they will come to the common-sense conclusion that it’s time to jump on the Medicaid bandwagon.

I can’t believe some of them won’t get the boot from voters in the 2016 elections if the public ever realizes how economically foolish and careless the majority of lawmakers have been for the past four years. Wyoming has lost more than $200 million by just throwing away federal funds. It’s money the taxpayers have already spent that is going to other states.

There are many other potential ways for Wyoming to reduce any shortfall. They include:

• End the current practice of sending an extra 1 percent of severance tax revenues from mineral production to permanent savings. The state would suddenly have about $100 million more per year to spend on necessary projects or boost agency budgets.

• The Budget Reserve Account holds nearly $110 million. While it certainly shouldn’t be drained, a portion of the balance could go toward easing the shortfall. Isn’t that one of the reasons it’s called a reserve account?

• Legalize medical and recreational marijuana. This year, Colorado announced its tax on pot has raised twice the amount alcohol taxes do. A lot of that money is now raised from Wyoming residents who travel south to purchase legal weed. Keep it here, like lawmakers did with money collected from lottery sales that Wyoming was losing to neighboring states.

The governor has already taken some steps to address the coming shortfall. He has frozen state positions that have been vacant, which Mead claimed will save about $18 million through next June. He’s asked departments not to buy new vehicles for the state’s fleet, and to delay some computer hardware and software upgrades. Neither of these moves will save a lot of money, but they won’t significantly hurt any department, either.

Making up a budget shortfall is always a significant challenge for legislators, but they have more than enough resources now if they choose to use them.

— Columns are the signed perspective of the author, and do not necessarily reflect the views of WyoFile’s staff, board of directors or its supporters. WyoFile welcomes guest columns and op-ed pieces from all points of view. If you’d like to write a guest column for WyoFile, please contact WyoFile editor-in-chief Dustin Bleizeffer at dustin@wyofile.com.