CHEYENNE — Wyoming is incredibly wealthy for a state facing a $770 million budget deficit. But a lot that wealth can’t be spent. Much of it, billions in all, is squirreled away in investment funds fed by taxes on minerals extracted in the state.
Now lawmakers are considering whether it is possible to divert some of the revenue that currently goes into those funds and spend the money on government operations or education.
The Joint Interim Revenue Committee moved forward with two proposals to divert approximately $130 million from investment accounts on Tuesday. Forty-two million dollars would go into an education fund while the remaining roughly $90 million would go into the general fund, which the Legislature can choose how to spend.
The $90 million, which comes from severance tax payments, has regularly been diverted to the general fund. But the bill tentatively approved by the revenue committee would make that diversion permanent.
The $42 million comes from an account that receives about $150 million a year from royalty payments on state-owned land. While one-third of the revenue is intended to be spent on school capital construction, the Legislature passed a law in 1994 to cap the amount sent to schools at $8 million. The committee moved forward a bill that would eliminate that cap, freeing the full $50 million to go toward school construction costs.
Sen. Dave Kinskey, R-Sheridan, opposed lifting the cap because it would allow inflation to eat away at the fund.
“If we permanently divert those funds aren’t we robbing future generations?” he asked.
Rep. Mike Madden, R-Buffalo, noted that the Legislature could always reimpose the cap if the energy industry in Wyoming recovered and the money was no longer needed.
The revenue committee has been tasked with finding new sources of revenue for both education funding and state government operations through new taxes and diversions of existing revenue.
Members decided not to pursue more radical diversions, such as sending the entire $150 million in revenue from state-owned land to be spent on education, a move that would have required a constitutional amendment.
Rep. Tim Hallinan, R-Gillette, said it would solve much of the education funding gap without raising taxes or cutting spending on schools. The committee may consider his measure at its December meeting.
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The risk of diverting funds that otherwise go into savings accounts or investment funds is that the fund might then struggle to keep up with inflation and actually decrease in value over time.
“That’s a question that governments have wrestled with forever,” State Treasurer Mark Gordon told the committee.