CHEYENNE — Gov. Matt Mead took his budget recommendations before state lawmakers and faced some opposition Monday.
Some members of the Joint Appropriations Committee took issue with proposals to increase the state fuel tax and to alter the state spending policy.
“Are we going to continue to fund roads piecemeal out of general funds, or are we going to find a funding source?” Mead asked.
In discussing his proposals for the second half of the 2013-14 biennium budget, Mead addressed his recommendation to hike the tax on gasoline and diesel 10 cents per gallon to help pay for highway construction and repairs. He said that the response has been underwhelming but didn’t elaborate.
His alternate recommendation is to divert part of the mineral tax money that goes into the Permanent Mineral Trust Fund toward road repair.
Mead said that while he doesn’t like toll roads, he is willing to look at that funding mechanism, too, but the legislative committees didn’t recommend it as a result of their work during the interim since last winter’s session.
A so-called legislative super committee consisting of the Joint Committee on Transportation, Highways and Military Affairs and the Revenue Committee last week voted to introduce a bill calling for the fuels tax increase.
On Monday, the Joint Committee on Transportation, Highways and Military Affairs heard comments from supporters and opponents of the tax hike but didn’t vote on the bill.
The state tax on gasoline and diesel hasn’t been adjusted in 14 years and is among the lowest in the country. Mead said a 10-cent increase is estimated to generate $71 million per year. Of that amount, $41 million would go to state highways and most of the rest would be used on local roads.
The Wyoming Department of Transportation estimates that $134.5 million per year is needed to maintain the highways in their current condition.
Rep. Sue Wallis, R-Recluse, said the ranchers she represents don’t like the fuels tax proposal.
She pointed out the Legislature is supporting higher gas taxes “at the same time we are encouraging use of alternate fuels and there is emphasis on fuel economy.”
Meanwhile, in the Joint Appropriations Committee hearing, Mead said his attempt to flat-line the state budget includes a 6.5 percent cut, or $60.5 million; eliminates 86 full-time positions; includes $11 million in pay raises and leaves about $20 million for the Legislature to spend.
Committee members noted that while the budget cuts $60.5 million, the governor’s plan adds about $190 million in spending, including $60 million for wildfire suppression next spring and summer.
The part of Mead’s plan likely to raise the most discussion is a proposal that would change the state’s spending policy.
The current policy, adopted about 10 years ago, limits state spending with the main goal of growing the Permanent Mineral Trust Fund. The fund now has a balance of $5.6 billion.
Mead’s plan would increase short-term savings in the Legislative Stabilization and Reserve Account — the state’s so-called rainy-day fund — and decrease long-term savings in the Permanent Mineral Trust Fund.
It also would require the state’s fiscal estimators to count capital gains funds in their fiscal profile so they could be budgeted for spending.
Mead said the changes were justified given the economic uncertainties and the need for flexibility to even out the swings in mineral income. Sagging natural gas prices have hampered the state’s economic outlook this past year.
“With regard to fiscal policy, I understand I’m making some fairly big sea changes,” Mead said.
He pointed out that once money is put into the permanent fund, it cannot be taken out.
The governor proposes directing 1 percent of mineral taxes toward the rainy-day fund. He said the rainy-day fund would grow from $1.7 billion today to $3 billion by the end of the next biennium.
He also wants to put coal bonus money into the rainy-day fund rather than spend it on school construction and maintenance. He said this would still leave $600 million for new schools.
“Our need to build new schools is less than it was five years ago and much less than it was 10 years ago,” he said
Rep. Steve Harshman, R-Casper, will be the new co-chairman of the Joint Appropriations Committee when the 62nd Legislature convenes in January. He said later that he wasn’t sure where he stood on the recommended spending policy changes.
Perhaps, he said, the Legislature should increase the spending limit in the formula.
He said that the doubling in state spending over the past 10 years was because of a buildup of needs resulting from previously bad economic times, particularly in capital construction, but the current rate of spending can’t continue.
Wallis said that flat-lining the budget wasn’t going to be enough.
“We’ve doubled the budget in 10 years. It’s going to require more than just holding the budget flat to fix that with all the built-in escalators,” she said.
Sen. Drew Perkins, R-Casper, will be on the Joint Appropriations Committee beginning in January, and is a member of the select committee on capital financing.
Perkins doesn’t believe the spending limit should be changed.
The policy formula restricts spending to 5 percent of the corpus in the Permanent Mineral Trust Fund averaged over five years. The capital gains are counted as part of the 5 percent, Perkins said.
“It’s working really well right now, and I think we would be remiss to change it,” he said.
Rep. Ken Esquibel, D-Cheyenne, opposes diverting the coal bonus money from school construction.
The Joint Appropriations Committee will meet through Thursday in Cheyenne, but it will be the newly appointed committee that will mark up the budget next year, said Sen. Phil Nicholas, R-Laramie, the outgoing co-chairman.