This week, the Legislature passed the supplemental budget. The Legislature passes a budget like this every legislative session, but this particular year’s bill was especially closely watched. With Wyoming wrestling with a decline in government revenue, this year’s bill is an especially important legislative decision on whether and how to address the decline in government funds.
The bill passed this week resulted in spending cuts of approximately $430 million, continuing the Legislature’s recent history of favoring cuts to spending over new or increased sources of revenue. Since around 2015, the Legislature has reduced the state budget by more than $1 billion.
This most recent round of spending cuts was made easier by the work of Gov. Mark Gordon. The budget passed by the Legislature was largely based on the budget recommendations submitted by the Governor’s office. The Governor’s serious consideration of the state’s financial picture and what it would take to keep us on sound fiscal footing certainly helped lead the way and convinced legislators that these cuts were necessary.
Budget cuts are always difficult for legislators, as most programs are easy to support. However, our declining state revenues mean that even good programs must sometimes face reduced funding. Just as all of us must make decisions on what good and necessary things to spend our money on, the state also has to make decisions that sometimes result in good programs losing revenue.
It is an unfortunate, but necessary, choice that the Legislature must make. Gov. Gordon’s support for these necessary decisions resulted in cuts that were well-considered and minimized disruption to state government. It is a testament to the good work of the Governor’s office that, even after both houses considered and voted on the state budget, the final result is still so close to the governor’s initial recommendation.
Unfortunately, even with this year’s budget cuts, the state’s fiscal issues are not solved. These were a necessary and prudent step, but they do not fix our ongoing structural deficit. Either more cuts or new revenue streams will be needed for a long-term balanced budget.
These cuts show that the governor – and the Legislature that largely adopted his recommendations – is serious about getting us to a permanent financial solution. That should be applauded. Fortunately, we still have funds in our state “rainy day” account to allow the Legislature and the governor time to make the further decisions necessary to address our revenue shortfalls.
This legislative session also saw the Legislature make other financial decisions for our state. Many of those decisions came from bills that did not pass. For example, even though it progressed further than ever before, the Legislature again declined to pursue Medicaid expansion. Although this year’s bill was written such that it would have had triggers and potential withdrawal from the program based on the levels of federal funding received, it still was unable to gain the support necessary to pass.
Other bills aimed at raising revenue also failed. One bill that would have allowed initial work to begin on evaluating tolling Interstate 80 was laid back and appears to be dead. Other legislation would have instituted an increase in the state sales tax once the funds in our state education accounts drops below a certain level. This also failed, but not until substantial discussion had occurred.
Education funding remains the elephant in the room when it comes to our state budget, and I would not be surprised if the sales tax bill is introduced again and is seriously considered in the future.
The level of consideration on the sales tax bill suggests that, if the Legislature ever does consider broad-based funding increases, an increase in the state sales tax is a likely first step. It would be simple to implement, especially compared to taxes like an individual or corporate income tax, and even though all Wyomingites would bear part of the burden, most of the revenue still comes from large industrial sources. I would not be surprised to see a sales tax increase of 0.5% or 1% in the not-too-distant future.
In sum, the governor and Legislature this session made some of the hard decisions that are necessary in our current financial situation. The governor, especially, is deserving of recognition, as his work in developing a fiscally conservative budget recommendation was well enough considered that the Legislature made very few changes before passing the supplemental budget.
Even though the budget cuts sometimes touch good programs, they were necessary for our financial well-being and are a step in the right direction for our long-term stability. More work will be needed in the future, but the decisions made in this session put us closer to a fiscally sustainable future.