Gordon approves $250 million in cuts

CASPER — Gov. Mark Gordon has signed off on more than $250 million in state budget cuts that includes furloughs and layoffs for state employees, a significant hit to senior services and a $90 million reduction to the Department of Health amid a worsening pandemic.

“This is an incredibly difficult task but we must respond to the financial circumstances the state is facing,” Gordon said in a statement. “These cuts will impact families across the state, will affect the services we provide and will have an effect on dollars that flow into the private sector.”

At this point, it is unclear what services specifically will be affected or eliminated by the budget cuts, which amount to a reduction of roughly 10 percent from the state’s general fund. The cuts were first announced by Gordon in a press conference last week.

However painful those cuts may be, they are only a drop in the bucket compared to what the state is facing amid the COVID-19 pandemic and persistent declines in sectors like oil, gas, and coal.

Even with an additional 10 percent cut planned later this summer, Monday’s announced reductions will not be enough to make up for an anticipated $1.5 billion budgetary shortfall over the coming two-year budget cycle, Gordon told members of the Joint Appropriations Committee Monday, meaning even steeper cuts – or a number of unpopular tax and fee increases – are likely coming sooner rather than later.

While the governor said he remained hopeful the state could avoid tax increases, the alternatives are likely to be challenging. They could include everything from the closure and consolidation of some school district operations to ending support for municipalities on highway and sewer projects.

Cuts alone are not enough to fix the deficit, Gordon warned. That will likely involve a number of unpopular options to diversify the state’s revenue streams, which are still dependent on Wyoming’s flagging energy sector. Those options could involve the elimination of a number of exemptions in the state’s tax code, including some for property taxes, disabled veterans and food, that latter of which could have a disproportionate impact on the state’s poorest people.

The cuts also come with challenges: notably, the fact that some services – when underfunded – could actually cost the state more in the long run. Offering an early retirement package to some state workers in an effort to save money, Gordon noted, could lead to a loss of experience in government when it is needed most, while slashing services like substance abuse treatment for inmates could lead to potentially greater costs to the state down the line.

Other cuts – like reductions to the state’s capacity to provide health care for its citizens – could also make Wyoming less attractive to businesses and potentially exacerbate the state’s fiscal problems.

“If we are thoughtless in how we make these cuts, if we just make cuts just to make cuts, we will compromise our ability to run businesses in our communities,” Gordon told lawmakers on Monday. “We will compromise our ability to fund schools at all. All of these aspects I think really need to be taken into consideration. We can’t overstate the fact that if you’re losing a third of your income, you really can’t live on your savings for that long.”

Finding the appropriate funding level for K-12 education will likely be among the biggest challenges faced by state lawmakers this year, particularly given how contentious previous attempts to downsize education spending have gotten in recent sessions.

Consolidating each county’s school districts has been a frequent topic as lawmakers have looked for ways to trim the education budget. A report delivered to legislators several years ago indicated that, should each of Wyoming’s 23 counties have just one district, the state could save $7.5 million a year. The savings would come from reducing administrative costs and other redundancies.

Of Wyoming’s 23 counties, only eight have one school district. Fremont County has eight districts, Big Horn has four, and Park, Sheridan, and Uinta counties each have three. The rest either have one or two districts. There has been district consolidation in the past, though none in recent memory.

There has yet to be a consolidation proposal that’s gained any ground in past legislative sessions. A measure in 2017 proposed studying consolidation, which lawmakers later did as part of a broader education study. After they received the results of the study, none showed interest in proceeding forward.

Lawmakers who’ve served on education or education funding committees have dismissed it. Even legislators who’ve been in favor of more cuts to education, like Joint Appropriations Committee member Sheridan Sen. Dave Kinskey, have shown little interest in the past. Unsurprisingly, districts themselves haven’t been enthusiastic about consolidation; administrators and school board members have decried what they see as a threat to local control.

On Monday, Gordon said there could be ways to reduce spending in education either through such a consolidation or in a simple cut to funding, citing large cash reserves many districts have built up in preparation for funding cuts. But what will actually happen is still, at this point, a mystery.

House Education Committee chairman David Northrup, R-Cody, said in a brief phone interview with a reporter Monday afternoon that he had not yet heard from the governor’s office about any specific plans for consolidating or eliminating school districts. While he contemplated some cuts during this past winter’s budget session, Northrup said he was still waiting on a report from the Legislative Service Office outlining potential savings that could be identified in school districts ahead of the 2021 general session, particularly as the Legislature continues efforts to recalibrate the state’s education system.

“I have my ideas where we can make cuts, but I don’t know what that amounts to,” he said. “There are some districts out there who increased the pay scale and actually gave bonuses this year knowing that they’re going into this thing.”

“It’s going to be painless, regardless,” he added.

While the main focus of Wyoming’s budget have been on cuts and where to make them, the question of raising new revenues will likely be the biggest challenge facing lawmakers ahead of 2021.

In comments to lawmakers, Gordon revisited an anecdote he shared in last week’s press conference about the successful recoveries seen in diversified states like Idaho and Texas, both of whom have taken great strides to diversify their revenue streams over the years.

While Wyoming had cause to be optimistic over having the nation’s third lowest unemployment rate, Gordon said, the state’s overreliance on minerals are likely to keep the economy depressed down the line, particularly as other strong sectors – like tourism – are failing to recover to a level he’d hoped for.

“We worry, a little bit, when we see what’s going on in the rest of the country, that the things we were counting on to have our revenue recover – things like people being able to go out, travel again, be able to do airline travel, all of those things – recover by this time this summer, so that we would have a robust recovery,” Gordon told the JAC. “And so far, we haven’t seen that. In fact, we’re seeing states like Florida and Arizona and California that are all starting to go back into shutdowns or significant restrictions. That’s not going to be good for our economy going forward.”