Energy prices soared. That was due to shortages created by the Biden administration’s war on carbon and the war in Ukraine. Some of the blame could be laid on Covid, I suppose. Though the pandemic is in the rear-view mirror, the consequences of a global shutdown continue to echo through the economy.
Due to shortages, energy prices increased dramatically, as did the state of Wyoming’s tax revenue. Contributing to the windfall are runaway property values due to zero percent real interest rates courtesy of the Federal Reserve.
There is over $2 billion in cash on hand now. And, projections are if the Legislature didn’t spend one dime more than it already has, and energy prices hold modest levels below their highs, by June 30, 2024, the state would be sitting on $4 billion in its checking accounts.
What to do with all that money? What a problem to have! We should all be so burdened.
It is important to keep in mind that this is a one-time windfall. The dim long-term prospects for oil, gas and coal remain. Those three products accounts for over half the state’s tax revenue.
To me, the answer is clear: save as much as possible. Put it away in the Permanent Mineral Trust fund, adopted as a constitutional amendment by the voters in 1975. That money is locked away, where politicians cannot get their hands on it to spend it. The income from the fund now supplies about 30% of our budget.
If saved, the one-time money we have today can earn interest, dividends and gains for generations to come.
Now, the Legislature is in Cheyenne considering a supplemental budget. Here is what that means — every even-numbered year the Legislature meets for 20 days and fashions a budget for the coming two years. In odd-numbered years, like 2023, the Legislature has the option of passing a budget that amends, or supplements, that budget.
Unless there is an emergency, there could be no supplemental budget enacted and the state would be just fine.
Not all share my “save for the future” philosophy. There is considerable desire by some, perhaps many, to spend a good portion, if not all, of that money. And, there are others who desire to save a portion, but in a checking account where it could be grabbed and spent later, not in the permanent fund.
It is a human tendency to want to spend, especially with that much money on hand. The list of ideas is non-stop, and they tend to move in increments of ten million. Here’s one: the University has a project underway to build two new residential dorms. The entire quarter billion-dollar budget is gone, and now there isn’t enough money to build one of the two towers. Cost to finish: $70 million. Add to that a law school remodel underway, and a proposal to remodel the stadium, and one to build a new pool, and the costs stack up quick.
Not to pick on the University, I’m a dedicated Cowboy Joe Club member. All those ideas have supporters, and I’ve heard from many of them. There are more proposals from the four corners of the state. I’m certain there are plenty of worthy projects in Johnson and Sheridan counties as well.
I hasten to add I have not cornered the market on fiscal virtue. I have few ideas of my own. But, the extra $3 million I’d like for predator management and invasive species control is dwarfed by comparison to other spending ideas.
I also have in mind a property tax rebate and reduction. First, increase the existing residential property tax rebate program to make more folks eligible. Second, secure a permanent reduction in residential property tax rates.
Governor Mark Gordon, to his credit, has proposed putting nearly $700 million into the Permanent Mineral Trust, an idea I support wholeheartedly.
If the supplemental budget becomes a runaway spending train, might the state be better off without one? After all, the money will still be here, stacking up, when the Legislature reconvenes next year.
Dave Kinskey represents Johnson County and eastern Sheridan County in the Wyoming Senate. A businessperson and former mayor of Sheridan, he can be reached at his legislative email at Dave.Kinskey@WyoLeg.gov.
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