WyLiberty Corporate Welfare Survey Backgrounder

Wyoming Voters Say Individuals Make Better Spending Decisions than Government

Introduction

The Wyoming government depends overwhelmingly on the minerals industry to fund its activities. The minerals industry, however, is a source of cyclical revenue; when revenues rise, so does government spending and hording. When revenues fall, politicians look to alternative sources of revenues to maintain spending levels. However, as the non mineral industry taxpaying population of Wyoming is unable to fund the shortfall, government has turned to corporate welfare, handing out unique benefits to specific companies or industries in the hope of increasing tax revenue.

Corporate welfare comes in many forms, but the main alternatives currently favored by Wyoming's political class are subsidies to attract businesses into the state. These include tax breaks, grants and supply guarantees. But do the people of Wyoming think government is the best at picking winners? Do the people of Wyoming think they will benefit from current subsidy schemes? What about the future? Given the cyclical nature of the minerals industry, resource revenue will climb once again. What should the people of Wyoming demand to prevent this government spending boom/bust cycle from happening yet again?

The Wyoming Liberty Group decided to call the people of Wyoming to ask them their opinions on these and other questions. Pulse Opinion Research conducted a telephone survey of 500 Likely Voters in Wyoming between June 10-14, 2015. Pulse Opinion Research, LLC is an independent public opinion research firm using automated polling methodology and procedures licensed from Rasmussen Reports, LLC. The margin of sampling error for the full sample is +/- 4.5% percentage points with a 95% level of confidence. This means that an identical survey conducted under the same circumstances would generate a result within the margin of sampling error 19 times out of 20.

Results Overview

In the survey, 73 percent of potential voter respondents agreed that Wyoming would be more prosperous if individuals had more of their own money to spend in their own community rather than government spending it on their behalf for the benefit of their community. In terms of ideology, 84 percent of self identified conservatives and 73 percent of self-identified moderates agreed, while only 38 percent of self-identified liberals thought communities would be more prosperous if people had more of their own money to spend.

In fact, results also showed that most respondents (58 percent), and in particular Republicans and Independents, say their family is unlikely to benefit if a private company goes to the government for funding when it cannot get funding for a project in the market.

In another question, 73 percent of potential voters responded that private sector companies and investors who use their own money are better at determining the long-term benefits and potential of new technologies. Only 10 percent responded that government officials who use other people's money were better at determining the benefits and potential of new technologies. In fact, more people, (17 percent) were not sure which group would make better decisions than thought government officials were best.

According to a 2009 Gallup Poll, Wyoming is the twelfth most conservative states in the nation, with about 42 percent of state residents describing their political views as conservative, while 40 percent describe their views as moderate and only 13 percent as liberal. Therefore it is very likely that the majority of potential voters in Wyoming would agree that the individual, not government, makes the best spending decisions.

The survey also asked potential Wyoming voters about a program recently created by the state government to help a few private energy companies get a proposal off the ground, a proposal that private lenders would not fund. Should the state government determine good business proposals or should such decisions be left to private lenders who are risking their own money? Only 17 percent of likely voters think the state government should determine good business proposals, while 67 percent said business proposals should be left to those risking their own money. While 70 percent of Republicans and 71 percent of Independents agreed, even 58 percent of Democrats agreed in this case. It would appear that while government officials might think they can pick winners and losers, potential voters do not.

Data Centers

Tax breaks and grants for data center attraction have grabbed headlines in Wyoming, but likely voters don't see the benefit. Most respondents (55 percent) say subsidies for job creation to companies like Microsoft should stop. Even more people are unwilling to pay higher home electricity costs (62 percent) to attract datacenters to their community.

Party affiliation also influenced results in questions regarding datacenters, with 62 percent of Republicans saying handouts to data centers should stop, 17 percent that they should continue, but 21 percent were unsure. For democrats, 42 percent said subsidies should stop but 35 percent of said they should continue and 23 percent were unsure.

When it comes to a direct impact on the family budget, when asked whether they would be willing to pay higher home electricity costs as a result of data center expansion, respondents show much more certainty. For Republicans, 70 percent were unwilling to pay more to attract data centers, with 19 percent willing and 10 percent unsure. Democrats were still more willing to pay higher home electricity cost to bring data centers to town, at 47 percent, but 43 percent were unwilling and only 9 percent unsure.

Given the greater impact of higher home electricity costs on low income families, lower income individuals are also much less likely to support paying higher home electricity costs to fuel data centers. Of those making less than $50,000 annually, 72 percent were unwilling to pay higher home electricity costs, however 76 percent those making over $200,000 are willing to pay higher home electricity costs.

Solutions

How can legislators prevent the minerals-driven boom and bust cycle from repeating again? The best way is to keep resource revenues out of the hands of future legislators. For example, instead of flowing all excess revenue into state savings accounts, Alaska sends half of the resource revenue collected to individuals via an annual dividend check. For potential Wyoming voters, 68 percent said Wyoming should adopt a similar resource revenue dividend. Republicans, at 75 percent and Independents at 66 percent agreed, while even 53 percent of Democrats agreed. Lower income individuals, (79 percent of those making between 30,000 and 50,000) agreed while only 54 percent of those earning more than $200,000 agreed.

But what to do with the excess tax revenue currently hoarded in government savings accounts? Of likely voters, 59 percent said the money should be returned to the people of Wyoming, while 30 percent said it should be spent on government priorities.

Conclusion

Corporate welfare is a losing strategy to diversify the economy, create jobs and generate tax dollars. Instead of transferring money from productive industries to favored industries and harming families along the way, a better strategy would be to encourage entrepreneurship through sales and severance tax reductions, and the elimination of red tape. Businesses with good ideas can get private funding and don't need to line up at the trough.

Survey Questions

Wyoming Survey of 500 Likely Voters

Conducted June 10-14, 2015

By Pulse Opinion Research

1* Who is better at determining the long term benefits and potential of new technologies, private sector companies and investors who use their own money or government officials who use other people's money?

2* Suppose a private company cannot get enough funding on its own for a project. If that company goes to the government for funding, how likely is it that your family will benefit from this spending of tax dollars?

3* The Wyoming government gave Microsoft Corporation subsidies that cost taxpayers more than $380,000 per job to create 50 jobs in the City of Cheyenne. Considering the median income in Wyoming is $54,000, should the people of Wyoming continue to provide subsidies for job creation to companies like Microsoft?

4* Data centers are large users of electricity so tend to be located in areas with low electricity costs. Large electricity use coupled with federal government policies to increase electricity rates means your family's electricity bill will rise. Are you willing to pay higher electricity costs to attract data centers to your community?

5* The state government gives money to counties to cover development costs such as roads, buildings, sewer and water to benefit private companies. Should the state government continue to spend money to subsidize private companies?

6* The state government created an infrastructure fund to spend Wyoming tax dollars to build a coal port on the West Cost to promote Wyoming coal exports. Should tax dollars collected in Wyoming be spent in other states to create jobs?

7* The state government recently created a program to help a few private energy companies get a proposal off the ground, a proposal that private lenders would not fund. Should the state government determine good business proposals or should such decisions be left to private lenders who are risking their own money?

8* Would Wyoming be more prosperous if the individual had more of their own money to spend in their own community or if government spent it on their behalf for the benefit of their community?

9* Should Wyoming adopt a resource dividend, as Alaska has, to put excess resource revenue into your pocket instead of the pocket of government.?

10* The state government has collected billions of dollars in rainy day funds. Should the money be spent on government priorities or returned to the people of Wyoming?

NOTE: Margin of Sampling Error, +/- 4.5 percentage points with a 95% level of confidence,

For a complete list of responses, please call:

Maureen Bader, Economist and Survey Lead
Wyoming Liberty Group
307-632-7020