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State of the State

Dan Cepeda, Star-Tribune Gov. Matt Mead is greeted by the Wyoming Legislature in February before his annual State of the State address on the opening day of the 2016 budget session at the Jonah Business Center in Cheyenne.

Gov. Matt Mead on Monday told a group of lawmakers who will be the first to craft the state’s budget not to cut state government in 2017, since Wyoming has experienced hundreds of millions in cuts in the past year.

Mead told members of the Joint Appropriations Committee, which is populated predominantly by fiscally conservative Republicans who have said the state needs to trim more fat, that the budget in his fiscal plan unveiled about two weeks ago is balanced. There is no need for further reductions, he said.

“We know we have to react to the times and circumstances we are in now, a point in time, but we can never lose sight that there is a bigger picture,” Mead said.

Members of the JAC are holding hearings this week with agencies to review their budget requests ahead of the 2017 legislative session, which begins Jan. 10. Oil, gas and coal are down, which has resulted in cuts to the two-year budget, which stood at about $3 billion when the Legislature adopted it in March.

The Legislature’s budget bill had about $67 million less in spending compared with the previous two-year budget. Then in July, Mead cut $249 million, as mineral revenues continued to plunge.

Hundreds of state government positions have been eliminated, he said.

“The cuts that you all made during the Legislature were tough cuts,” the Republican said. “The cuts I worked on in June were tougher yet. I do not think the citizens of the state, the agencies, the employees have felt the full effects of the cuts we have made.”

Lawmakers on the JAC didn’t say anything in response to Mead’s plea. However, lawmakers did share opinions and questions on other topics, including money for tribal liaisons and construction for new state buildings. They also discussed ideas to plug a huge looming shortfall in education, which is paid for differently than general government operations.

Tribal liaisons

Last year, lawmakers provided only one year of funding for a liaison each for the Eastern Shoshone and Northern Arapaho tribes, which together live on the Wind River Reservation.

Mead asked for $160,000 for the second year, a reduction, but lawmakers nevertheless questioned the amount.

“I’m trying to figure out why it isn’t possible to have a single liaison,” said Sen. Bruce Burns, a Sheridan Republican who will be a chairman of the committee next year.

The tribes have not been working together in more than two years, when a business council composed of members of both tribes that made decisions for the reservation dissolved, said Kari Gray, the governor’s chief of staff.

“They operate entirely independently of each other, currently,” she said.

Gray said leadership in both tribes support the position, as communication between the state and the tribes improves by using liaisons.

Casper Republican Rep. Tim Stubson wanted to know if that support would diminish if the tribes had to pay 10 or 20 percent of the cost of the positions.

Gray said the governor’s office had not discussed the matter with tribal leadership or the liaisons.

“The liaisons talk to the governor’s office weekly. They join Mead’s cabinet meetings, and “we help them facilitate all the work that we’re trying to do with different agencies and the tribe,” Gray said.

Bonding

Mead is recommending the state borrow money to pay for an estimated $80 million to fix the 15-year-old Wyoming State Penitentiary, which was built on an old lake bed and has massive structural problems.

It’s an unusual move. Unlike many states, Wyoming hasn’t bonded for construction projects of government buildings in recent years. During the boom in oil and gas, the state paid for construction with cash.

Wyoming has the top credit rating of AAA. In the business world, most CEOs would want their companies to use a combination of cash and bonds, Mead said.

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Rep. Cathy Connolly, a Democrat from Laramie, is interested in not just bonding for the prison but for other construction.

“In fact, we have such a good rating right now and rates are so low, we could instead of paying cash for capital construction, we could do much more bonding,” she said.

Education

Mead has asked lawmakers to create a committee that would look into K-12 education. In Wyoming, revenue from minerals pays for education’s operations and construction even more than it pays for general government operations.

Projections indicate the state could face a $1.8 billion shortfall in school operations – which cost roughly $3 billion during the two-year budget cycle – by June 30, 2022.

Rep. Steve Harshman, an Appropriations chairman and House speaker-elect, asked Mead what he thought about applying the so-called 1 percent statutory diversion toward education.

One percent of severance taxes from oil, gas and coal have typically been funneled to either the general fund or into the Permanent Wyoming Mineral Trust Fund, a $7.5 billion pot of money from which the principal cannot be touched but the investment income can pay for government operations.

Mead’s answer had to do with budget process and policy in Wyoming.

He said state law limits him, when he drafts his budget plan for the state, from recommending how to spend some streams of revenue and accounts – from the statutory diversion to the rainy day fund. He would like that to change, he told lawmakers “because I think that blurs the lines between the separation of powers,” he said.

In the end, Mead said that more flexibility in budget planning will help everyone in Wyoming. He will be able to pitch new and creative ideas, such as using 1 percent of severance taxes on education, he said.

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Follow political reporter Laura Hancock on Twitter @laurahancock

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