The 20-day legislative session ended with a budget for operation of state government, including schools and colleges. However, no agreement could be reached on a construction budget, and we adjourned without an appropriation bill for state construction. That saves, for now, $162 million.
It was a tough budget session. Our state’s dependence on the energy industry for jobs and tax revenue is well known. Direct taxes on coal, oil and gas account for over half the state’s revenue.
The demand for coal has plummeted. Wyoming’s coal production in the Powder River Basin has declined by over 20% in this decade and taxes paid on coal have fallen by a like amount.
Fracking has unleashed a torrent of cheap natural gas. That is great for the US and world economies, but the low prices handicap Wyoming producers and state tax collections.
The Saudis and the Russians are in an oil price and production war which has sent prices, and production taxes, plummeting.
As the Legislature convened the coronavirus epidemic was just beginning. In the last week of the session, the stock market plunged on virus-related fears. A quarter of the state’s revenue derives from its stock portfolio. Impaired Wall Street earnings further reduced the state’s anticipated revenues.
The only budget seemingly immune from pressure to reduce is K-12 education. In fact, the automatic escalators in the K-12 funding formula, imposed under Supreme Court dictate, drove education spending $133 million higher for this budget. This rate of spending increase outstrips the inflation rate. How much of that reaches teachers and classroom instruction – or gets spent elsewhere – is a matter of concern.
Our biennial budget deficit rapidly approaches a half billion dollars, with the difference made up from our rapidly dwindling savings.
The failed budget for state construction included necessary maintenance on state government and college buildings as well as new construction. Three proposed University of Wyoming projects could not be agreed upon: a new pool, reconstruction of the football stadium and an expansion of the Law School.
The proponents of same insisted on the inclusion of these projects in any construction budget. The opponents, meaning an overwhelming majority of the Senate, felt it imprudent to spend tens of millions of dollars on this kind of construction during a budget collapse.
As a UW alum, I support the institution, but not for this kind of expenditure in this economic environment.
The negotiations stalled, with the UW project proponents firm in their insistence on including funding for the pool, stadium and law school. On the last day of the session, we adjourned without a construction budget. The next legislative session convenes in January of 2021 for a 40-day session. We will see then how the economy, and our revenues, shake out.
Meanwhile, stay healthy.Dave Kinskey represents Wyoming Senate District 22 which consists of Johnson County and eastern Sheridan County. A businessperson and former Mayor of Sheridan, he can be reached during the legislative session at Dave.Kinskey@WyoLeg.gov