Wyoming One of Few States Facing Economic Hard Times

Smack in the middle of the longest economic boom in U.S. history, Wyoming is one of a handful of states saddled with a deficit, instead of a record-setting surplus.

The reason is because Wyoming — whose tax structure is heavily dependent on minerals such as oil and coal — has experienced a decline in minerals production, coupled with an increase in education spending.

Much of the Legislature’s upcoming session, which runs from Feb. 14 to Mar. 10, will focus on nailing down solutions to the Equality State’s fiscal problems. From the time the last legislative session ended in March 1999, the expected magnitude of the state’s shortfall has fluctuated dramatically.

Legislators went home thinking they would have to confront a $183 million biennial deficit for fiscal years 2001 and 2002 when they returned. But the figure shrank to only $17 million in October, thanks to OPEC’s decision to curtail oil production, which dramatically boosted its price.

However, Wyoming’s yo-yo deficit had one more surprise in store. In January, a combination of factors pushed the shortfall to its current $45 million level, according to the Legislature.

State officials spent much of the summer of 1999 looking for budgetary solutions. Legislators vowed not to raise taxes until every last program had been trimmed within an inch of its life, and pledged not to resort to across-the-board cuts.

After taking a hard look at Wyoming’s fiscal picture, though, they found little room to maneuver inside an already lean budget.

A proposal was floated to eliminate Wyoming Public Television and the State Fair, which would have led to a $2 million savings. Lawmakers quickly backpedaled from that idea in the face of withering public criticism.

So they came up with a slew of recommended new taxes. The Joint Revenue Committee gave its blessing to a real estate transfer tax on the sale price of land, a one-cent increase to the state’s existing four-cent sales tax, among other things. Legislators also strove to do away with sales tax exemptions for recreational facilities and newspapers.

Trying to play both sides down the middle, Republican Gov. Jim Geringer offered two $1.3 billion budgets. One, a so-called patchwork budget, contains no new taxes but makes drastic cuts to government services. On the other hand, Geringer’s ‘long-term’ budget, introduces $86 million in new taxes. Wyoming’s legal community is sure to love a proposal in the long-term budget that slaps a sales tax on legal bills. Geringer’s tax-raising budget also would boost the fuel tax five cents over two years and raises property levies.

Underscoring which budget he favors, Geringer warned that without a long-term solution his state’s deficit would balloon to $160 million.

The Joint Appropriations Committee spent January wrestling with the governor’s patchwork budget. It sliced nearly $100 million from it, including substantial cuts to education and state employee salaries. The panel also wants to kill a public/private entity known as the Wyoming Business Council, which concentrates on Wyoming economic development and has a $21 million annual budget.

Lawmakers agreed the council’s funding will likely be restored by the 90-member Legislature, but the resulting dust-up brought about the forced resignation of the agency’s CEO last week.

The full Legislature will start scrutinizing the budget Monday, mindful that Geringer has threatened to call a special session should lawmakers fail to enact a long-term tax solution.

When the dust clears, it appears likely that Wyoming will have a sales tax increase. The big question is who will bear the brunt of it and how big will it be?