How to Fund a Porkfest Without Really Trying

Everybody wants the one percent

Did you know the State of Wyoming has more than one fund with handy cash ready for the taking? While most people think of the Legislative Stabilization Reserve Account (LSRA) as the rainy day fund, the state has hundreds of spend-ready funds. One of those, the Strategic Investment and Project Account (SIPA), could act as the source of funds for some of the capital construction projects legislators still want to fund, even as state revenue plummets.

Usually during the budget session the legislature deals with one budget bill funded by the general fund. This year is different. Due to constitutional concerns about the content of the budget bill (it should be for general operational expenses only), Wyoming's Joint Appropriations Committee broke the budget bill up into five parts and state capital construction is one of them. The general appropriations bill will be funded primarily with general funds and a $36 million rainy day fund raid. The capital construction bill (SF0041/HB0123), with about $360 million worth of construction projects, will be funded in part with AML funds and the SIPA.

One problem—the SIPA doesn't have money in it at the moment.

No problem—some legislators have crafted legislation that if passed, would divert money from the Permanent Wyoming Mineral Trust fund into a new coffee can to guarantee the SIPA.

The legislature created the SIPA in 2013 as a way to capture some of the realized capital gains from investments in the Permanent Wyoming Mineral Trust Fund (PWMTF). This short-term savings account can be used for one-time expenditures.

Last year, the legislature diverted $21.4 million from the SIPA to cover the budget shortfall.

At the moment, the SIPA is empty but money may eventually flow into it from realized capital gains from the PWMTF that were not forecast. That is, if there are any. How then, can the SIPA be used to fund building boondoggles? By creating a new coffee can called the One Percent Severance Tax Account that guarantees it.

Governor Mead originally wanted to use the one percent severance tax diversion to pay back the money raided from the rainy day fund to pay for construction projects. The JAC decided instead to funnel it into a new account that would be used not just as the guarantee but also as a loan fund to pay for construction projects.

That's right. If the SIPA doesn't get enough to fund the boondoggles, the treasurer can loan it money from the One Percent Severance Tax Account.

Talk about a variation on a theme. Both schemes imperil the financial security of future generations.

Just what is so important? The projects are listed below.

So if you thought the inflation proofing of the PWMTF was safe, you'd be wrong. The JAC, like the governor, is after that one percent.