Two conservative lawmakers introduced a measure this week to cap growth in state budgets in anticipation of the next boom — during which they say Wyoming could save enough money to avoid any future tax increases. The proposal is being carried in mirror House and Senate bills by Sen. Bo Biteman, R-Ranchester and Rep. Chuck Gray, R-Casper. House Bill 172 and Senate File 98 are both called Wyoming Budget Stabilization Act. The bills would prevent both the governor and the Legislature from increasing annual spending more than an amount calculated through a combination of inflation and population growth rates.
The bill is a countermeasure to lawmakers interested in raising revenue through tax proposals they say will modernize the state’s tax system, the sponsors say.
“We are going to work hard to stop these harmful tax increase proposals,” Gray wrote in an email to WyoFile. “Our state government needs to manage spending during boom years to save more for bust periods.”
With 16 lawmakers cosponsoring it — five senators and 11 representatives — the bill shows some lawmakers think spending is still high even after years of reducing budgets in most areas of state government.
Skeptics of the measure worry it could tie the hands of future legislators and governors and lead to cuts to government services. In the past, policymakers have taken advantage of booms and the corresponding spikes in state revenues to invest in Wyoming’s public institutions, from infrastructure to building projects, including schools and government buildings, particularly the Capitol. Despite increased spending during boom times, the state has built up impressive savings, accumulating one of the largest sovereign wealth funds in the world.
But Gray and Biteman suggest the state can save more in the next boom and avoid having to raise taxes on residents, who currently enjoy having their government services largely paid for by taxes on mineral extraction. Larger savings could also save the state from service cuts during downturns in that industry. Indeed, in recent years the Legislature’s chief saving account — commonly called the “rainy day fund” — staved off even deeper cuts to public education than Wyoming saw in 2018.
“The idea of the bill is that state government has enough revenue to fund government across a boom-bust economic cycle,” Gray wrote. “If the state saves more during good years to grow its savings, we will be able to manage years where there is not as much revenue.”
Gray did not respond to a question asking whether the bill counts on a future boom when energy markets — particularly the coal and oil markets — look increasingly uncertain. Increased oil prices and robust stock market earnings appeared to have pulled Wyoming out of tough fiscal in an October revenue report. But those gains have taken a hit since and it’s unclear where oil prices go from here, according to Wyoming’s January economic forecast. The Gray-sponsored bill has been assigned to the House Revenue Committee.
The measure will seem too restrictive to many lawmakers and faces an uphill battle, predicted Marguerite Herman, a longtime legislative observer and director of the Wyoming League of Women’s Voters.
“It looks suspiciously like a soapbox,” Herman said.
The “instability” of the state’s reserve funds makes public education funding a challenge during busts, Gray and Biteman said in a press release when the legislation was first made public on the LSO website.
“During bust periods, when there are large deficits, harmful, dangerous and unnecessary tax increases are proposed,” the sponsors wrote.
By Andrew Graham