Like a football team preparing for the playoffs, Big Horn Basin politicians huddled up and discussed the challenges ahead for the 2016 Legislature as the state faces substantial budget cuts.

Wyoming is set to lose billions of dollars in coming years due to decreased values of extraction minerals. In October, the Consensus Revenue Estimating Group (CREG) projected state revenue will decrease by about 23 percent, or $2.29 billion, between now and 2018.

Last week, Gov. Matt Mead announced his proposed budget, and on Thursday representatives from Powell, Cody and Meeteetse met with some of northwestern Wyoming’s representatives and senators to discuss his proposal and what they would like to see prioritized in the budget.

Their top concern was cutting funding by about half for cities, towns and counties, to $90 million.

That $90 million for the 2017-18 biennium is a decrease from the $183 million budgeted for the current biennium, and is meant to be spread between Wyoming’s 99 incorporated cities and towns — 43 of which have populations of less than 500.

According to the Wyoming Association of Municipalities, smaller towns such as Meeteetse rely on that funding, since they can’t raise much revenue on their own.

Compared to the rest of the proposed budget cuts, Wyoming’s cities, towns and counties are taking the heaviest cuts, said Cody Mayor Nancy Brown.

“It is important to note the governor’s budget was very creative,” said Rep. Sam Krone, R-Cody, noting that it didn’t present cuts across the board. “It makes sense to look at what is working and not working. ... One area we can’t go overboard on is reducing the funding to cities, it is too important.”

Sen. Ray Peterson, R-Cowley, said he wants to maintain funding for the State Loan and Investment Board, since it helps fund projects across the state.

Infrastructure must be built and maintained, said Powell Mayor Don Hillman.

“You could throw millions of dollars at a company to get them to come, but if you don’t have infrastructure, you are wasting your money,” Hillman said. “I don’t mind a rainy day fund, but some day it is going to hail.”

WAM is divided into six regions, and each will contact its legislators during the budget session with a list of what will happen if certain cuts are made, Brown said.

“It is not a threat; it is a fact,” Brown said, noting that a secondary list will be compiled of what local entities believe are absolute necessities in order for cities and towns to survive.

“When you think of cities and towns, that is 70 percent of the state, and at the county level it literally affects every citizen in the state,” Brown said. “I ask, with all due respect, that you help us.”

This isn’t the first time the Legislative playoffs had a rough spread, and each player brought a set of ideas to the table as local leaders rallied at the Lamplighter Inn on Thursday evening. Each year, Powell and Cody alternate hosting the meeting, and turnout was bigger than usual this time around.

The spread

Money troubles, medical problems and more are what’s in store for the Legislature.

The state already is facing a $200 million hole that needs to be filled now and another $400-600 million that needs to be filled in the upcoming biennium, Peterson said. The state is still in good shape, considering the drop in mineral prices, he said.

But it’s not all optimism as the Legislature approaches — healthcare struggles continue.

“The industry is not healthy in Wyoming,” said Rep. Elaine Harvey, R-Lovell, noting the state lost a major insurance provider and is down to one insurance provider in the marketplace — all the other ones are regional. “One size does not fit all, and it is hurting Wyoming.”

Harvey is chairman of the Labor, Health and Social Services Committee and serves on three different national committees focused on those issues.

More troubles are on the horizon. In 2018, the Cadillac Tax goes into effect, and the state is going to be on the hook for $900 million simply for offering good health insurance to state employees.

“All employers will feel it if they offer a plan that is what we used to call normal — now it is a Cadillac plan,” Harvey said.

She estimated out-of-pocket health expenses to be about $6,000 per family each year, on top of the $700 premium.

Harvey said there’s “little relief in sight” for Wyoming until changes are made at the federal level.

“It will be an interesting session coming up. There’s talk of raiding the rainy day fund, raising taxes, or the other side saying to cut spending. That is the side I need to be on; we need to reduce spending and say no to some things,” Peterson said. “But my no may be different from another’s no.”

The game plan

Mead’s proposal called for utilizing the state’s rainy day fund to soften the impact.

“It is definitely sprinkling on the front porch,” said Rep. Nathan Winters, R-Thermopolis.

If revenues from mineral extraction remain low for four to six years or longer, the Legislature will have to look to the Revenue Committee for a solution — but for now, cutting expenditures is No. 1 in Peterson’s playbook.

Irrigation districts across the state came in with several project proposals in need of funding at the same time, said Rep. David Northrup, R-Powell. But they had to be limited, and not all were approved.

“They see the light at the end of the tunnel is black and they put these projects in,” Northrup said.

School projects, on the other hand, are funded by coal revenue that’s “dried up,” Northrup said. Additional coal lease funding won’t be seen until 2017.

“And it will be trivial compared to what we have,” Northrup said.

So for the next four or five years, Wyoming’s school funding will remain flat, he said.

In the past, school projects were funded with county property taxes.

Right now, there is concern that Park County residents have not been willing to tax themselves and generate more local revenue with a fifth-penny tax, Brown said. Efforts will be made in the coming year to promote the additional sales tax that voters turned down in 2012.

“Park County wears it like a badge that we are the only ones who don’t (have the tax),” Brown said. “We just have got to overcome the voice that does not want taxes, period; it is an investment and not a punishment.”

The Legislature sends funds to cities, towns and counties based on what’s available at that time, which means state revenue isn’t stable, whereas a sales tax would be more reliable.

“It can’t be considered extra or gravy or a gift,” Brown said, noting consensus funds go to capital construction projects. “When that gets taken from us, we have no ability to do anything besides hang on.”

A cut in state funding also means cities such as Cody and Powell can’t foster economic development, she said.

“If it continues, we will have to do something about revenue in the state, and that won’t be popular,” Peterson said, noting that discussion about diversifying the state’s revenue sources already has started. 

The punt

Mead said he would support increasing funding for cities, towns and counties if legislators propose a way to make it happen.

“So our job is to come to our legislators and say we need this and this is why we need this,” Brown said. She noted that smaller towns, such as Edgerton, would be unable to withstand those cuts. “I don’t want to sound overly dramatic — the smaller towns could just shut down if this happens.”

The majority of the bills presented in the 2016 Legislature will focus on budget issues and very few will be non-budgetary items, Krone said.

Fumbles?

Not all suggestions were well-received, such as:

• A possible state income tax was discussed, but not well received, Peterson said.

• The Hathaway Scholarship fund is doing well and continuing to make money, Northrup said.

“It would be nice to put that in to the kids and bump that up 4 or 5 percent, but then the University of Wyoming jumped up tuition,” Northrup said. “Every time you bump Hathaway up, they take the spending money away from you.”

• Hillberry asked if the UW athletic program was showing a net profit or a net loss, since Mead called for allocating $8 million for it.

“Maybe Wyoming needs to readdress the athletic program and drop to a different level,” Hillberry said. “I know I’ll get tarred and feathered for even saying it.”

Touchdowns?

Harvey anticipates the Legislature will pass a bill to protect direct primary care centers such as 307Healthcare.

Wyoming is not a Medicaid expansion state, and Harvey said that’s good for the state.

“Those that have expanded are regretting it big time,” Harvey said. “It is hitting their state budget — the ones being left out and the ones hurt the most are the working poor who can’t afford insurance, and we can’t afford to insure them.”

Medicaid expansion was voted down 19-11 last year, and Harvey said she doubts it will pass this year either.

Working on the state’s budget has been a completely different ballgame compared to working on Big Horn County’s budget, Peterson said. Investments made in the past generated about $600 million, providing a cushion from the boom and bust cycles.

“It is a thin pillow, but a pillow nonetheless,” Peterson said. “We did some good things there, we invested a lot of it, and returned a lot to towns and counties.”

Wyoming’s public portfolio ranks 43rd in the world, Peterson said, noting that’s up against countries and other states.

“Wyoming is in good shape,” Peterson said.

The city of Powell is moving along with having the state invest endowment funds, Hillman said.

By investing in bonds, the city could see a higher return rate than if the funding was kept in a CD, Peterson said, noting the proposal will be introduced in the upcoming session and so far he’d heard “nothing but positive remarks.” 

“This seems like a pretty easy way to help cities,” said Powell City Administrator Zane Logan. “I don’t see a negative from the state side.”

The downturn in 2008 caused some losses on investments, primarily impacting benefits packages and retirement funds, Peterson said.

“There is a risk, but there is less risk than in the (stock) markets,” Peterson said.

“We watched our pennies, nickels, and dimes in Big Horn County, and then down there (Cheyenne) it is a different budget all together — but now it is time to tighten belts a bit,” Peterson said. “A dose of reality will hit us in the face and that is a good thing to help us realize where money is being spent.”

A Hail Mary pass

The longterm projections are bleak, so long-range foresight will be needed in the upcoming legislative session. 

Representatives from Wyoming went to Portland, Oregon, to look into exporting coal through their ports, Peterson said. But agreements need to be in place for Wyoming to get its coal from the Cowboy State to the Pacific Coast.

“We are doing all that we can to continue our ride from the minerals and the wealth we enjoy there,” Peterson said.

Meanwhile, states such as Pennsylvania turned the tables on natural gas production. A few years ago, Wyoming produced twice as much natural gas as Pennsylvania. Now Pennsylvania produces five times as much natural gas as Wyoming, Peterson said.

Wyoming’s natural gas used to be sold primarily to Midwestern and East Coast states, but now it goes to California — where winters are more mild and demand is lower.

“We appreciate the reminders we are hurting out here, but we hear it,” Peterson said. “We’re going to try to get you some extra money.”