Why Wyoming Needs a Taxpayer Protection Pledge

We often point to the third-party payer problem as the cause of the explosion in health care costs. Insurers pay doctors who provide services to patients. This separation of payer and patient means the patient has little incentive to question the cost or even the quality of service.

Now imagine what would happen if a big part of a state's spending is funded that way.

Wyoming is a good example of that very problem. In Wyoming, the minerals industry funds about 70 percent of government spending—but who benefits from the spending? Not the minerals industry. According to the Wyoming Taxpayers Association, the average Wyoming family paid about $3,000 for $30,000 in government services in 2014. Citizens have had little reason to question the level or cost or necessity of services received because we pick up such a small part of the tab. Now, with the decline in the minerals industry, the sugar daddy is going sour leaving an oversized government sorely in need of streamlining.

As the gap between revenues and spending widens, the question becomes, how will that gap be filled? Let's face it. The people of Wyoming are not in a position to pay an additional $27,000 per year in taxes to plug the hole. But what are legislators and administrators doing? Trimming here and there instead of getting government out of areas better served by the private sector and allowing the private sector to create jobs. The crucial first step in the necessary transition is to refuse to shift this tax burden to the people of Wyoming.

Do the people of Wyoming have some way to sway that decision to keep politician's hand out of our wallets?

Yes we do. It's called the Taxpayer Protection Pledge.

The Taxpayer Protection Pledge asks candidates running in the upcoming Wyoming election to commit to oppose and vote against any tax increase or any new tax.

Why do we need the pledge now?

When government collects tax revenue from one group and spends it on another, the incentive to hold government accountable for those spending decisions dissolves away. Since about 2002, Wyoming residents have enjoyed big government spending without a tax increase because the minerals industry picked up most of the tab. Since residents and voters paid little for the increase in services, the state does more and less efficiently than it would otherwise. This lack of spending accountability resulted in bloated government.

Severance and sales tax revenue, the two biggest contributors to the state's main spending account, the general fund, grew by 58 and 65 percent between the 2001-02 and 2013-14 biennial budgets, respectively.

Through Wyoming Governor Freudenthal's regime in the 2000s, state government spending exploded. General fund spending grew from $1.5 billion in the 2001-02 biennial budget to $3.8 in the 2013-14 budget, a 150 percent increase, before leveling out.

What was the result?

The revenue shortfall for fiscal year 2016 alone totals almost $290 million when we add up what Governor Mead had to cover off in his last budget and the additional $130 million shortfall identified in the April CREG report. For the upcoming biennium, Governor Mead announced a shortfall of between $240-$510 million. The governor covered off about $248 million of that but Wyoming's fiscal situation is increasingly grim.

With another quarter billion to cover off, what are the options? Government could reduce spending to reflect this downturn in revenue or it could raise taxes to make up the difference.

The Taxpayer Protection Pledge helps elected politicians stick to the first choice. The pledge affirms that a candidate commits to opposing net tax increases, the creation of new taxes, and the elimination of tax exemptions or deductions unless these are matched dollar for dollar by tax rate reductions. This will last for the elected person's time in public office.

In the wake of the minerals slow-down, citizens are faced with a choice. We can start paying for the services we receive from government or we can bring government down to a level we are willing and able to pay for.

The Taxpayer Protection Pledge ensures that elected representatives get our fiscal house in order through long-term spending reforms that make government more affordable and accountable to the people. Right now we need all our resources so we can make decisions on the best way forward for Wyoming.