Late last week, the Wyoming Legislature’s Joint Appropriations Committee, which sets the state budget, and its Joint Committee on Revenue, which establishes fees and tax increases, met virtually to weigh its options to absolve the state’s looming fiscal crisis.
The Revenue Committee, which has so far failed to advance any significant revenue options this year, carried on its struggles while, on a separate Zoom channel, the Joint Appropriations Committee began debating the hundreds of millions of dollars in budget cuts pitched by Gov. Mark Gordon’s administration necessary to balance the budget — with hundreds of millions still left to cut.
On day one, members of the Joint Appropriations Committee voted to defund the state’s indigent burial program and mental health programs for children and to eliminate non-medical home services for the elderly, with additional cuts looming in the days to follow.
Meanwhile, House Appropriations committee members rejected an attempt by members of the Senate to cut 5% from the K-12 school foundation budget: a change that, if adopted, would have been enough to solve approximately one-third of the state’s projected shortfall.
Last week’s actions by the Joint Appropriations Committee — while rife with reductions in spending likely to have devastating effects for some Wyoming residents — did demonstrate a clear aversion to the types of cuts necessary to make up for Wyoming’s diminishing revenue streams amid the systemic collapse of coal and persistent underperformance of oil and gas.
While there was a general consensus among members of the Joint Appropriations Committee that the solution lay with a combination of tax increases as well as cuts, the committee charged with implementing those increases discussed solutions likely insufficient to avoid the most draconian reductions. Meanwhile, the desires for eliminating and reducing government services reigned supreme.
“I don’t want us to appear tone-deaf for what our citizens are going through at this time,” Sen. Cheri Steinmetz, R-Lingle, said during Thursday’s Joint Appropriations Committee hearings, evoking the challenges faced by businesses and citizens amid the COVID-19 pandemic. “I think it’s completely appropriate to be looking at the cuts before we ever speak of the revenue enhancements at this moment in time. We have taken our cuts out in the private sector and it has been very crippling.”
The few revenue options that could be on the table are also likely to face difficult roads ahead. On Thursday, the National Federation of Independent Business released a membership poll showing stiff private sector opposition to the handful of revenue options backed by Gordon and the Legislature. Meanwhile, large revenue drivers like an income tax on the ultra-wealthy and a marginal real estate transfer tax tailored toward buyers of expensive homes have also proven to be non-starters.
Unfortunately for Wyoming, those could have been the most viable options, particularly as the state’s already regressive tax structure and significant cuts to public services stand poised to threaten Wyoming’s most vulnerable populations. On Tuesday, researchers with the London School of Economics and Kings College London found that measures to cut or reduce taxes for the rich in more than a dozen countries over the last 50 years have only benefited the individuals who were directly affected, doing little to positively affect the economy or improve jobs.
“Policy makers shouldn’t worry that raising taxes on the rich to fund the financial costs of the pandemic will harm their economies,” David Hope of the London School of Economics said in an interview on the study with Bloomberg News.
A majority of the impact of such a policy would likely be felt in Teton County, which has benefited from the lion’s share of affluent newcomers arriving in the Cowboy State. In an interview, Rep. Mike Yin, D-Jackson, said that a lack of a mechanism to mitigate the impacts of those wealthy emigrants actually stand to harm the community by exacerbating the housing and income inequality that was already prevalent in the ultra-rich community, while doing little to benefit other, less-populous corners of the state.
Creating a mechanism to reduce the regressive nature of the state’s tax structure, he said, could ensure reduced levels of harm and increased opportunity.
“It actually makes it harder to achieve the American dream,” Yin said. “If we don’t want someone in Wyoming to move away, or if we want them to move here, start a business, be successful, raise a family … if that becomes harder to do, then you’re going have an economy that doesn’t work, because people can achieve some measure of success in their life.”
This past year’s elections symbolized a referendum against new revenue options, as numerous anti-tax Statehouse candidates achieved success ahead of a legislative session likely to be filled with budget cuts. What it will take to change that thinking, some lawmakers suggested last week, might be painful.
“If people know we’re serious about cutting, maybe they’ll open up their thought process on the other half of this equation,” Sen. Mike Gierau, D-Jackson, told his fellow members of the Joint Appropriations Committee on Thursday in a discussion about cutting the state education budget. “But we have to start.”