In the real world, when revenues aren’t high enough to cover costs, costs have to come down. In the government world, when revenues aren’t high enough, taxes have to go up. It’s time for government to join the real world and lower its costs, not raise taxes.
Tipping his hat to real-world reality (a redundancy, but a necessary one these days), Wyoming’s governor, Matt Mead, has asked each state agency to cut eight percent from its budget. This cut, however, is a cut only in the government sense. It doesn’t cut the budget by eight percent; it cuts one, sometimes very small, part of the budget by eight percent.
Worse still, some state agencies have budgets that do not come under the scope of the governor and legislators. As a result, a budget cut may be very small indeed. Wyoming’s Department of Transportation (WYDOT) is a good example.
Whether it is accountable to legislators or not, an agency’s budget is made up of three sources: 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. Federal funds come from the federal government, and other funds come from every other way the government has figured out how to pick taxpayers’ pockets.
According to WYDOT’s 2013-14 supplementary budget request, the legislature approved a 2013-14 budget of $270.3 million. That includes $86.5 million from the general fund, $44.8 million in federal funds, and $139 million in other funds, such as vehicle and drivers license fees, mineral royalties and fuel taxes.
WYDOT’s eight percent cut is $2.6 million. But eight percent of $270.3 million is $21.6 million. That might look a bit like $2.6 million, but this is no typo. How did WYDOT arrive at an eight percent budget cut of $2.6 million?
The only fund subject to this mysterious eight percent budget cut is the general fund, and WYDOT’s general fund for the 2013-14 biennium is $86.5 million. Eight percent of $86.5 million is $7 million, so how did they get to $2.6 million?
The eight percent budget cut is not a cut to the 2013-14 biennium budget; it is a cut to the 2014 general fund appropriation, excluding one time funding. So the easiest way to calculate the budget cut is to take the $86.5 million, divide by two, subtract one-time funding and multiply by eight percent and voila! An eight percent cut of $2.6 million.
The cuts will come from reduced spending on WyoLink, airport improvements and highway improvements.
But the 2013-14 budget of $270.3 million is only the budget that comes under the scope of the governor and legislature. WYDOT has other budgets that don’t come under the scope of the governor and legislature. In fact, according to WYDOT’s annual report, its 2012 budget is close to $545 million. That means, in a two-year period, WYDOT spends closer to $1 billion, not $270 million. That additional $730 million is not subject to budget cuts. So the $2.6 million cut is closer to 0.26 percent of WYDOT’s real biennial budget.
This is more like a rounding error than a budget cut.
To be fair, in WYDOT’s budget cut summary provided to legislators, it states that the $2 million reduction in highway improvements will be offset by “cutting other non-general fund budgets within WYDOT.” This means that the “amount of revenue flowing to highway improvements are held harmless by the proposed $2 million general fund budget reduction.” In other words, highway maintenance won’t be cut, something else in a budget not under the scope of the legislature will.
But hold onto your wallet. It looks like the gasoline tax may go up by 10 cents per gallon on July 1, 2013 to offset what is paraded about as a draconian budget cut.
Let’s face it – government has a spending problem, not a revenue problem. Budget cuts that resemble rounding errors show that this government is creating nothing more than a charade to fool people into believing it must raise taxes. This makes government the winner and the taxpayer the loser on this highway of dreams.
It is time to wake up in the real world, cut costs instead of raising taxes and make the budgeting process transparent and accountable to the citizens of Wyoming.