CHEYENNE – The Wyoming Legislature kicked off the first week it will work through the 2023-24 supplemental budget on Monday.
Since the state operates on a two-year budgeting process, this is an update halfway through the biennium to address unexpected costs, inflationary concerns and agency requests. The biennial budget is debated in even years, whereas the supplemental budget is under consideration in odd-numbered years.
Both chambers introduced mirror bills, House Bill 1 and Senate File 1, onto the floor of their respective chambers for first reading, and amendments will begin funneling in before the second reading, which is scheduled for Wednesday. The last day for the House and Senate to consider their budget bills before moving into negotiations is Friday.
There are no amendments brought forward in the Committee of the Whole when the bills are on general file, but legislators have the opportunity to ask questions and receive a full rundown of what the Joint Appropriations Committee put forth.
The Joint Appropriations Committee spent the second half of the interim focused on the supplemental budget, and budget hearings commenced in December. Gov. Mark Gordon came to lawmakers with a nearly $900 million general fund budget proposal, and advised a fiscally conservative approach, despite an unexpected influx of state revenue.
State agencies had their own exception requests, and external cost adjustments were advised to address inflationary costs. One of the largest official external cost adjustments was for K-12 education, which both the Joint Education Committee and Gov. Gordon recommended at nearly $72 million, but the JAC cut to $43 million.
“Governor Gordon wants to honor the intent of the biennial budgeting process with stable and sustainable funding for Wyoming’s state government,” according to Wyoming Sense, the governor’s website focused on budgetary transparency. “That means a supplemental budget is solely for requests that are emergency in nature or for other needs that cannot be postponed until the next budget session.”
Members of the Joint Appropriations Committee take the governor’s recommendations and committee proposals into account, but make their own alterations in final days of the interim that develop into the bills sitting in the Legislature chambers now.
Lawmakers will bring forward amendments on the general government appropriations bills between second and third readings as they see fit, and eventually come to a compromise before the end of the general session in the Joint Conference Committee.
This is not the only appropriations bill that was worked on by the committee, or that the chambers will have to work on, but it is the largest. Lawmakers will also work on three bills allocating the final federal American Rescue Plan Act dollars, as well as funding for capital construction and local governments.
Each chamber has its own approach to processing the supplemental budget bill, starting with the first reading.
Rep. Bob Nicholas, R-Cheyenne, led state representatives through the bill on Monday as the House Appropriations Committee chairman, along with fellow members on the committee.
Nicholas gave a brief introduction, and he explained how the joint committee approached the supplemental budget throughout the interim. He said there were seven representatives and five senators on the joint committee, which often gave the House an upper hand to prevail on votes – creating a source of conflict between the bodies for the past six or seven years.
He said this year they tried their best to compromise to avoid tension, but he informed representatives there will likely be amendments from members of the committee to bring it back to the House position. Nicholas said a perfect example was the external cost adjustment for education, which they weren’t in full agreement on.
The House Appropriations chairman noted this was a unique time, because it was the first time in his tenure of more than a decade that there was a $1.76 billion revenue surplus. He said it had been nearly 25 years since there was such a significant surplus.
A portion of the $1.76 billion is from a surplus on the school account side, which is close to $850 million. He said it was the highest it had ever been since 2000, and even when they created the Hathaway Scholarship in 2005, it didn’t have that much money.
Part of the function of the Legislature is to determine what to do with the surplus, such as savings or one-time projects.
“Since I’ve been on Appropriations, we’ve cut 555 positions out of state government. We cut over $500 million in the costs of ongoing government,” he said. “In 2010, right before that particular crash, our budget was $3.6 billion. This budget that we’re working on is now $2.8 billion. I mean, it just ebbs and flows with the dollars that we have, and how much we save, and what we believe is a responsible use of our dollars.”
Stem of funding
However, in order to decide where the funding should go, he said it is important to understand where it comes from. He said the majority comes from mineral severance taxes, and the money the state has available for the budget can change both rapidly and dramatically.
This occurred recently in the state. He said as the pandemic hit, there was an $877 million deficit in the general fund, and a $550 million deficit on the school side. Just a year and a half later, there is nearly $2 billion ready to be spent.
Nicholas said this is the perfect example of the volatility of the state’s funding model, and the reason why saving is important.
“We have to continue to prepare ourselves for tomorrow,” he said. “And to eventually supplant a lot of the income that we have out of extractive industries.”
With the budget that came out of the Joint Appropriations Committee, he said he believes there will be a balanced general fund budget, and education will have an excess of between $300 million and $400 million, even if every request is approved. This will continue for the general fund budget into 2028, but then there is a decreasing trajectory for education.
“Even after what we do today, and through this budget in this session, we’ll still need work in the long term,” his introduction concluded.
Senate Appropriations Committee Chairman Dave Kinskey, R-Sheridan, had a much shorter introduction for the government appropriations bill in his chamber. There are also far fewer new legislators who have never worked through a budget bill before.
He only had three numbers to bring to the attention of the Senate, and alluded to the 2022-24 biennial budget. Kinskey said the state was permitted under the terms of ARPA legislation to spend money on permissible expenses of the state government.
The current biennial budget has $82.9 million worth of ARPA dollars going to the Wyoming Department of Health, $81.8 million to the Department of Family Services and $241 million to the Department of Corrections. He said when the Legislature reconvenes for the budget session next year, that money will be exhausted, and there will be $406 million worth of ongoing expenses to fund.
“It’s something to bear in mind,” he said. “You don’t necessarily see it in this budget, but it’s looming out there.”
Kinskey also went through the expected process for amendments, and welcomed any questions or report requests from members of the Senate Appropriations Committee. This was similar to the House, as many legislators have inquiries such as how decisions were made in committee, if appropriations are recurring or the content of a state agency’s testimony.
“Now, the budget is yours. We’ve done our work,” Kinskey said. “It comes out to both floors. And it’s yours to amend as you will – either increase, decrease or bring something wholly new to the table.”