Gov. Gordon prioritizes savings in budget proposal

CHEYENNE — Gov. Mark Gordon’s recommendation for the 2023- 24 supplemental budget matches his previous call for fiscal conservatism in the wake of a higher-than-expected state revenue forecast.

While there is close to $1 billion available in the General Fund and Budget Reserve Account for the budget, Gordon recommended putting $412 million into the Permanent Mineral Trust Fund.

This was his largest recommendation within the total $908 million appropriation from the general fund.

“Our economy has performed better than anybody could have anticipated, providing what I am referring to as a serendipitous amount of funding, putting us in a good position in the short term,” Gordon said at a press conference Friday morning. “It is our responsibility not to squander this fortuitous opportunity, and make sure that we invest in our future in a way that will pay off for years to come.”

He wrote in his budget message to legislators that the trust fund in 2021-22 generated a third of the general fund revenue necessary to pay for the state’s expenses, and saved taxpayers thousands of dollars.

Putting the $412 million into the PMTF now, he said, will pay dividends in saved taxes, while ensuring the state’s income in future years is more dependable.

The School Foundation Program account exceeded revenue estimates as well, and more than $950 million was available for appropriations.

Gordon recommended $318 million of the balance be spent, with $248 million from the School Foundation Program going toward the Common School Permanent Land Fund. He said this generates revenue from investments to pay for K-12 education, and the “work in past budgets has finally moderated the structural deficits that have accompanied the state’s obligations to fund education.”

The governor recommends an additional $70 million be appropriated for a one-time external cost adjustment for K-12 education to relieve inflationary pressures.

While administrators in school districts have expressed this makes it difficult to budget for the future, it exceeds the recommendation made by the Joint Appropriations Committee.

He restored the Joint Education Committee’s full recommendation, except for sustaining it beyond just one year.

Rep. Landon Brown, R-Cheyenne, is a member of the Education Committee who supported the $70 million recommendation.

He told the Wyoming Tribune Eagle he was elated the governor recommended the full cost adjustment, but he believes it should be sustained for the future. He said the economic pressures that are happening to every single citizen in the state also apply to school districts.

“One of the biggest areas that this will assist school districts is actually going to be in pay increases, and retention and recruitment of current and new employees,” Brown said.

Gordon said there will need to be more comprehensive discussions regarding the K-12 budget, and he hopes there will be a new approach related to the cost of education. He was wary of attitudes such as “here’s what it’s going to cost, you got to pay it. Or we’re going to cut it, and you’re just going to have to deal with it.”

More than $2 billion was also left in the Legislative Stabilization Reserve Account, often referred to as the “rainy-day fund.”

Gordon wrote in the overview of his budget proposal that the $500 million in cuts made in the past two years and the influx of federal COVID-19 relief made it possible. The federal funds covered $412 million of the current biennium budget, but Gordon said the ability to do so will dry up in future years.

He wants the state to be prepared to pay for the services that are deemed essential, such as the prison system, health care and family services.

“Even with these proposals, one thing is certain: the government in Wyoming is leaner than it has been for a generation,” he said. “We have been meticulous in streamlining and bringing more efficiency to the government. We’re not done yet.”

Rep. Tom Walters, R-Casper, is a member of the Joint Appropriations Committee that will take into account the governor’s recommendations when it meets next month in advance of next year’s legislative session.

He said he believes Gordon put forward a well-balanced and logical budget. He supported more funding being put into savings because he said the more money that is working for the state in terms of investment income, the better off it will be in the future.

“It’s a good approach,” he told the WTE. “That much into a permanent account that we can only spend on investment and not principal may be a little cumbersome, but I think a large amount of savings is a good idea.”

He suggested putting half in the Permanent Mineral Trust Fund and half in the LSRA, in order to make the funding more liquid and accessible.

He said it is important to remember that close to a year from now, the budget will have to reincorporate the more than $400 million of general fund dollars that is currently from the American Rescue Plan Act.

“I understand exactly what the governor is doing. Saving general fund dollars and spending federal dollars,” said Sen. Mike Gierau, D-Jackson, another member of the JAC. “I think a thank you note to Washington wouldn’t have been a bad idea.”

Although the governor placed a significant emphasis on putting funds away for future generations, he also addressed urgent issues brought to his attention in the past year.

Not only did he suggest the external cost adjustment for school districts, he also proposed funding mental and behavioral health gaps, protecting natural resource industries by controlling invasive species and predators, and increasing state employee compensation.

“We are hemorrhaging state employees at some agencies, but I will also be the first one to say that it’s not just pay that state employees are looking for,” Brown weighed in. “They’re looking for a more professional location, and they’re looking for more flexibility in the workplace. I think that that’s going to be the governor’s next step is to figure out what he can do to fix that.”

A few of the largest one time recommendations were $35 million for Wyoming’s Tomorrow Fund, $68 million for the retiree benefit contribution, $26 million for local governments to respond to inflation and $10 million to put back into Mineral Royalty Grant Funding.

“That program ran out of funds last year, and it is absolutely essential for our communities to be able to address emergencies they have,” he said regarding the Mineral Royalty Grant program. “Rawlins lost its water supply last year, for example. Clermont lost its water supply.”

Handling inflation played a major part in the governor’s General Fund and Budget Reserve Account allocations. Gordon said he understood the toll it was having on residents’ households and businesses, especially those living on a fixed income, despite revenues being up due to the high prices for Wyoming’s natural resources.

“We have historically high inflation levels, and that’s a double-edged sword for Wyoming,” he said.

Proposals such as funding for property tax relief, health care and capital construction projects previously authorized by the Legislature are meant to give support. Walters said he saw increasing state employee compensation as imperative, as well as efforts to handle inflationary pressures.

He said increasing the funding for projects already approved wasn’t for cost overruns, but rather inflation taking its toll on the budgets.

“Those are good for mainstream Wyoming, because probably 80% of the work that’s done on the state projects are done by local contractors,” he said. “So, that money then gets circulated into all of our local economies, and that is good for the state.”

Gordon also recommended $50 million for an Energy Matching Fund, $8 million for the Cultural Trust Fund and $5 million for Wyoming’sNatural Resource Trust Fund, but there are still agencies and institutions he had to tell no.

He said it is always difficult to turn away proposals and more challenging when there is more money available. He said it takes discipline to make sure that the state can provide the same levels of service, all while analyzing the current environment.

Gordon said inflationary pressures from the outside can’t be controlled, but allocating funding can.

“Wyoming ranchers know the value of hay and how a good crop can mean the difference between keeping a herd and having to sell it,” he wrote in his letter to the Legislature. “Bumper crops are not guaranteed. Significant fluctuations can occur from year to year, depending on management, soil fertility, and – most importantly – moisture. Good years mostly coincide with good rainfall and mountain snowpack. Bad years attend drought. So, it’s important that ranchers make hay while conditions are right and set aside excess for poorer times in the future.”

Gordon said he believes “such is Wyoming’s current economic situation.”