Big government types who look to government to solve every problem under the sun always get their nickers in a knot whenever politicians talk about budget cuts. In the case of Wyoming’s dreaded eight percent across-the-board budget cut, they needn’t have bothered.
The Wyoming Legislature’s Joint Appropriations Committee (JAC) is reviewing the eight percent budget cut called for by Governor Mead. It amounts to about $75 million. This seems odd given the Wyoming government is planning to spend about $8.1 billion during the 2013-14 biennium. Eight percent of $8.1 billion is about $648 million, so reducing this to $75 million must have been a very tricky process, and you know what? It was.
Let’s start to unravel this mystery.
To start, the 2013-2014 biennial budget has three main sources of revenue: the “general” fund, “federal” funds, and “other” funds. The general fund gets its revenue from a part of the sales and use taxes, severance taxes, state investment income, and a few other sources. Seems that the eight percent cut only comes out of general fund appropriations. The total general fund appropriation for the 2013-14 biennium was about $3.2 billion. Eight percent of $3.2 billion is about $256 million.
Wait a minute! That’s not $75 million either. How did $256 million shrink to less than a third?
Well, each agency, except health, is supposed to cut eight percent, not from its two-year general fund appropriation, but from its standard budget for 2014. So each agency is not going to cut its biannual budget by eight percent, it’s going to cut part of its standard budget for 2014 by eight percent.
The simplest way to calculate this is to take an agency’s general fund appropriation for the 2013-14 biennium, subtract exceptional funding, multiply by eight percent, divide by two, and voila! You’ve calculated the proposed budget cut for each agency subject to cuts.
Let’s see how this works with a couple of examples.
The Retirement System manages the pension funds for state employees. It has a 2013-2014 biennium budget (its two-year budget for 2013 and 2014) of about $13.8 million. Of that, $32,755 comes from the general fund and the rest comes from other funds (such as investment income and employee and taxpayer contributions to the pension funds). If we multiply $32,775 by eight percent then divide the result by two we get a total budget cut of one-thousand, three hundred and ten dollars.
Yes, you read that right. The Retirement System’s eight percent budget cut is $1,310. Not exactly a bloodletting, hardly even a cut. Let’s call it a trim, or better yet — a snippet.
This snippet is to come out of the Emergency Medical Technician budget, the only budget that gets funds from the general fund. Snippets are forthcoming from communications ($62), advertising ($83), and in-state travel ($1,165). I don’t know about you but I’m feeling rather underwhelmed.
Another example, the Department of Education, has a biennial budget of $261 million. Most of the funding for the Department of Education comes from federal funds, so here again we end up with a trim rather than a cut. The general fund appropriation is about $18.9 million. Multiply that by eight percent and divide by two and you get about $760,000, but this department only plans to cut about $753,000. About $284,000 of that cut is coming from contract services, $42,000 from in-state travel and $66,500 from communications.
What is driving these underwhelming budget cuts is the concern about a drop in severance tax revenue from the mineral industry. Senator Phil Nicholas pointed out that if we have another warm winter, it could slash natural gas revenues and overwhelm these cuts.
Then again, if the winter is really cold these agencies may not have to cut at all.
So, if you thought Wyoming’s governor was trying to reduce the burden of government on hard-pressed taxpayers, you’d be wrong. This trim trickery creates nothing more than a confusion camouflaging a budget cut charade.