In today’s State of the State address, Wyoming Governor Matt Mead repeated the list of accolades the State of Wyoming received from a variety of organizations such as the Tax Foundation to conclude that the state of the state is strong. However, no matter how much better Wyoming performs when compared to other states, state revenue is stagnating. Now, instead of continuing his past, at least nominal, focus on budget cuts, the governor proposes to increase the cost of government using short term revenue gains.
The fiscal future of the state now depends upon the legislature’s willingness to stem the spending tide. Otherwise our children and grandchildren will be left with a legacy of debt and higher taxes.
The governor talked about an increase in manufacturing jobs in the state. His two examples, the Microsoft Data Center and Magpul, are both recipients of corporate welfare, having received handouts from Wyoming taxpayers to come to the state. This means that down the road they could end up being a net cost to the state, not a net benefit.
The governor also discussed increasing the cost of government, from higher salaries for bureaucrats to higher spending government agencies such as the Game and Fish departments. What the governor left out was how this spending increase would be funded. This is more than just an oversight. The vast majority of the revenue increase the governor plans to spend on more expensive government comes from capital gains.
But as any investor knows, a capital gain today can turn into a capital loss tomorrow. This has, in fact, already happened.
Don Richards, the Co-Chairman of the Consensus Revenue Estimating Group, the organization that forecasts state revenues upon which the governor’s budget it built said, [the first quarter of 2013] “has been particularly challenging for the fixed income portfolio.” Put plainly, the fixed income portfolio had a capital loss.
Mr. Richards confirmed this when he said, “after June 2013 we have capital losses, [and] we don’t set losses off against previous gains, but against future gains. We are now in a holding pattern until the next gains accrue. And in an increasing interest rate environment on a fixed-income only portfolio, we could be waiting a while.”
Yet higher pay for bureaucrats is one of the governor’s top priorities.
Instead of saying we need to continue reducing the size of government, which we do, Gov. Mead says we don’t have to continue cutting bloated budgets. This is a recipe for the growth of government and eventual fiscal disaster.
One of the governor’s priorities is the Game and Fish Department (G&F). However, G&F is a very good example of a bureaucracy with an out of control spending addiction that needs more discipline, not more money. Its 2013-14 $9.4 million budget, which included a $349,482 cut, could explode if he governor gets his way, to $12.5 million in 2015-16 – a 33 percent increase over the budget from the last biennium. So much for fiscal restraint.
But that’s not enough. G&F also wants to hike license fees. The tax grab, as proposed, would take an additional $8 million out of the pockets of both resident and non resident hunters over the next three years.
Let’s face it, government will never have enough of your money.
Instead of fueling the growth of government, the governor needs to prioritize and reduce spending, and focus government on its core mandates.
While it is true, relatively, that the state of the state is strong, it won’t remain that way if Wyoming continues on the same spending death spiral as the rest of the country. With a focus on spending and tax reductions, we can stop the decline and set the economy on a growth path to prosperity.