Thursday, May 24, 2018

Where Are the Candidates on Spending Cuts?

The tax issue is going to stay on top of this election cycle, and with it, the question of government spending. As I asked yesterday,
Instead of looking for new, permanent, structural tax increases, when is the Wyoming State Legislature going to task one of its committees with looking for new, permanent, structural spending cuts?
This is not just a rhetorical question. It is very much an assignment for our legislators for the 2019 session. And, of course, for our gubernatorial candidates. So far, the rich field of candidates has been increasingly supportive of my Tax Pledge; only Mark Gordon, Sam Galeotos and Foster Friess have yet to take it, or, as Hageman did, make an equivalent statement of similar strength. However, the candidates have yet to start talking about the spending side. We have seen some promising statements about holding back spending, reducing spending and practicing fiscal conservatism, and that is a good start. But we are now approaching a long, hot summer leading up to the August primary, and it is time for our candidates to give voters a better understanding of where they stand on structural, permanent spending cuts.

As an example of how the candidates reason, and where they could go from here, consider this report from the Casper Star Tribune, May 18:
Candidates for governor had no shortage of ideas for boosting the economy when asked by a pro-business group Wednesday [on May 16], most of them centered on building up Wyoming’s existing strengths in energy extraction, tourism and agriculture rather than striking off in bold, new directions. 
This is what I am concerned about. I am worried that our Republican candidates are playing it safe. However, playing it safe is not going to do Wyoming any good. Playing it safe means endorsing the status quo we have today on the spending side of the state budget. 

There is also another problem here. We will get to it in a moment as we get back to the Tribune story:
The Wyoming Business Alliance asked five Republican candidates and one Democratic candidate how they would diversify the economy. The group also asked how they would give a boost to Wyoming’s existing, natural resources-based industries and fix declining state revenue. “I worry so much that we spend a lot of time trying to figure out that great big thing that is going to cost the state a lot to do. And sometimes that works out and sometimes that doesn’t,” said State Treasurer Mark Gordon 
I'm sorry, Treasurer Gordon, but I don't understand what that means. Are you for or against something? 
Besides Gordon, two other Republicans — Jackson investor Foster Friess and Cheyenne attorney Harriet Hageman — called for first and foremost building on Wyoming’s strengths, including the coal, oil and natural gas extraction that supply about 70 percent of state revenue. 
As I have explained several times, it is not as high as 70 percent, but there is another noteworthy point here. The discussion about the state budget is always conducted in a manner that makes the state budget the center piece of the Wyoming economy. Even though the candidates participating in the discussion do not mean to, they de facto make it sound as if the private sector is there for government. 

There is a very important practical problem in this. By placing government at the center of the debate, we implicitly endorse the idea that government is a static entity with some sort of inherently merited existence. This is precisely the statist view of government, one that - I am sure - Mary Throne would be happy to sign on to. Conservatives, however, should not be so quick to do so.

Going back to the Tribune story, we actually find a couple of Republicans who sound more like they start from the private sector and reason their way out from there:
Sam Galeotos, a Cheyenne businessman, focused much more on technology as the answer to helping all areas of Wyoming’s economy. “Technology is not only the great equalizer in this world, it’s the great enabler,” Galeotos said. “As far as diversification goes in my mind, technology is everything in the state of Wyoming.” Hageman, who spoke after Galeotos, was skeptical that new tech business would significantly offset the industries that have supported Wyoming’s economy for decades. “You still have to recognize that minerals generate 50 times more revenue to the state of Wyoming in terms of meeting the state’s spending obligations than tech does,” Hageman said.
Interesting number. I am not necessarily questioning it, I would just like to know where she got it from. Again, though, I would urge the conservatives among the Republican candidates to put some healthy distance between themselves and the rhetoric that puts government in the center. 

The Tribune again:
Mary Throne ... was the only candidate to mention finding new ways to generate revenue, hinting that she might support new forms of taxation. Throne didn’t get into specifics, however, saying she would solicit ideas after becoming elected. “We need to build a tax structure that will support the economy of the future, not the economy of the past,” Throne said. “To me, it’s a very fundamentally conservative principle to talk about how you’re going to pay your bills.” 
As opposed to liberals, who spend first and worry about paying for it later. It is good that Throne has now come out full force as a tax hiker. That should tell every Republican candidate where they need to go on that issue.

Then the Tribune gets to Taylor Haynes:
Education, especially in technology, will go furthest to help the economy over the long run, said Laramie area physician and rancher Taylor Haynes. “If you build it, they will come. But what do you build? You build a diverse, highly skilled workforce,” said Haynes, a Republican candidate. 

Last but not least, Foster Friess, who, says the Tribune,
spoke in spiritual terms in describing his motivation to get involved as a candidate. “It would be an ultimate example of complete lack of gratitude. A complete lack of gratitude like, ‘OK God, thanks for the good things, now I’m going to have a good time.’ So I’m compelled,” Friess said.
That's all fine and good, but God is not going to pay my taxes for me. Nor is he going to fix the budget deficit. 

Perhaps we should treat Foster Friess as the entertainer who is in the race to make everyone else look serious. Which brings me back to the question I asked initially:
Instead of looking for new, permanent, structural tax increases, when is the Wyoming State Legislature going to task one of its committees with looking for new, permanent, structural spending cuts?
Can we perhaps get a few words from our candidates on this - a few words beyond the normal, general, fiscally conservative commitments?

Wednesday, May 23, 2018

Cities, Counties Want More of Your Money

The Wyoming Association of Municipalities has renewed its lobbying for higher local taxes. On May 22, KGAB reported:
A legislative panel will continue to study the idea of giving local municipalities in Wyoming the ability to impose new, voter-approved taxes to replace the funding they now get from the state. The Joint Revenue Committee has been tasked by the Legislature's Management Council to consider the idea during its interim meetings starting next month. "They are looking ahead, and they are saying there is going to be a time where we don't have these direct distributions coming back to local governments anymore," Revenue Committee co-chair Rep. Mike Madden, R-Buffalo, said. 
I have a question. Let's wait with it. There is more from the KGAB story:
Local governments have been receiving aid from the state for years. During the 2018 budget session, the Legislature authorized the state to disperse $105 million in direct distribution funding among local governments over the next two-year budget period. However, a downturn in state revenue from mineral extraction in revent years has left the state spending more than it is taking in from taxes on energy production. 
Well... our state government is spending more than it is taking in from taxes - period. Let's try to stay focused here. Anyway:
Rick Kaysen, the executive director of the Wyoming Association of Municipalities, said his organization has been pushing for the Legislature to allow municipalities to create their own tax options for the past few years. The organization released two reports that determined Wyoming municipalities are more dependent on state aid than the municipalities in every other state in the country. 
I have read that report. It is, well, an interesting read. On page 19 they claim that municipalities in Wyoming received $738 million in revenue in Fiscal Year 2015. Of that revenue,

  • The state government contributed 45 percent,
  • The federal government contributed four percent, 
  • The local government contributed 28 percent,

Which adds up to 75 percent. The rest, says the Wyoming Association of Municipalities (WAM), comes from "miscellaneous revenue", property taxes, other taxes, licenses and fees. 

Here is a question (no, not the one I mentioned earlier - we will get back to that one in a moment): who collects the property taxes, other taxes, licenses and fees that WAM says local governments somehow get their hands on? According to them, it is not the federal government, not the state and apparently not the local government either. But some government has to collect them - by definition, in fact. Is it the Klingon empire? Putin? The Chinese? 

And how can anyone report "miscellaneous revenue" as falling outside of federal, state and local government's jurisdiction? What are these revenues? Voluntary donations? Even if it is revenue from government businesses, those businesses are owned by some government entity - or else they would not be government businesses - and that owning government is then the one that collects the revenue. 

Besides, the report specifically states that the non-government revenue is "non-enterprise revenues". And nowhere does it systematically report data that validates Rick Kaysen's claim. There may be another report that he is actually referring to, though if there is, it does not appear to be available on the WAM website. 

That does not mean Rick Kaysen is completely wrong. There is a grain of truth in what he suggests. If we go to the one source of this type of data that has withstood the test of time - the Census Bureau - their latest local government finance report ranks Wyoming 11th of the 50 states in terms of the state funds share of total local government revenue:

Source: Census Bureau

With 36.5 percent of local government revenue coming from the state, we are 8.1 percentage points above the national average. But we are also 7.3 percentage points better than New Mexico, which ranks third in the country. 

If WAM wants to lobby for the right to draw more blood from local taxpayers, they are of course free to do so based on fact and fiction in whatever balance they want. However, the choice between factoids and fictoids will eventually catch up with them and raise questions about their reliability as representatives of local governments in Wyoming. If they cannot get the facts straight when they advocate for more revenue, we may have to raise a few questions about the reliability of the politicians who use WAM for their lobbying efforts. 

Now for my question, motivated by the KGAB article stating that
The Joint Revenue Committee has been tasked by the Legislature's Management Council to consider ... giving local municipalities in Wyoming the ability to impose new, voter-approved taxes to replace the funding they now get from the state
Instead of looking for new, permanent, structural tax increases, when is the Wyoming State Legislature going to task one of its committees with looking for new, permanent, structural spending cuts?

Tuesday, May 22, 2018

Socio-Economic Profile of Wyoming: Update

For the record, I have not abandoned my socio-economic profile work. The next step requires some deeper research that I just don't have time for right now. I have a bigger report planned and I am preparing as time allows. Please be patient. Thanks.

Election 2018: Rex Rammell

On Sunday I explained how Rex Rammell, the Constitution Party candidate for governor, could edge out the Republican candidate and be Mary Throne's foremost opponent in November. This scenario rests on two premises, one of which I mentioned on Sunday: that the Republican party elects a candidate in the August primary who is soft on taxes. Since Rammell has signed The Tax Pledge, under this scenario he will attract fiscally conservative voters in large numbers.

There is just one more premise that needs to be fulfilled for Rammell to rise past a tax-soft GOP candidate: that Rammell comes across as a true conservative candidate. 

There is no doubt that Rammell has conservative credentials. He has written a book, A Nation Divided, where he expresses great concern for our nation's future and points to unlimited federal government powers as the main culprit. He also lays out ten principles for restoring our constitutional republic to its true purpose, with a minimum of government and a maximum of individual freedom. 

Again, on the principled side, Rammell comes across as a strong conservative. But what about actual policy reforms? His book does not give away any clues, though it was not written for that purpose. By contrast, his platform for his gubernatorial campaign brings him straight into the policy-making spotlight, so it should have more to offer. 

It does. Rammell explains:
Wyomingites raised the roof when Donald Trump upset would be president Hillary Clinton. Trump a pro coal, pro energy president now held the highest office in the land. With Trump in federal regulations would be repealed, coal, oil, and gas prices and the future of Wyoming would soar. Trump would be Wyoming’s savior or would he? Jump ahead one year into his presidency. Yes; regulations have been curtailed, but prices for coal and gas have not come up and oil only slightly. In fact, the CREG report projects the demand for coal will continue to decline as natural gas takes more and more of its market share. The price for natural gas will also decline as more and more gas fields come on line. Demand for oil will continue, but prices will only slightly increase due to large reservoirs on shore and off. What does this mean for Wyoming? The new normal for revenue is here to stay and it is millions of dollars less than what we are use to. The boom of the coal era is over! Not even Trump can bring it back.
He then presents his main policy-reform idea:
For nearly half of Wyoming’s history coal has been the mineral that has built modern day Wyoming. State of the art schools and the 7th highest in the nation on school appropriations. All that is about to change. School funding along with many other spending cuts is inevitable or is it? The mineral sector accounts for about 70% of Wyoming’s revenue. This comes in the form of severance tax (production tax), federal mineral royalties, and mineral lease bonuses. Wyoming collects 100% of the severance tax paid by mineral companies, but only 48% of federal mineral royalties and lease bonuses. ... What would happen if all of the mineral royalties and lease bonuses came to Wyoming instead of 48%? Wyoming would essentially be at the top of the boom again even though prices and demand for our natural resources had declined significantly. 
There is just one problem. The federal government likes taking over half of all mineral royalties and lease bonuses and are unlikely to give it up just because Wyoming is hurting. 

Rammell's solution to our state's budget crisis is to take federal lands:
A Congressional Act to transfer title to all the public lands and hence all of the mineral money will never happen. They barely were able to lower taxes. Lawsuits? The chances of that happening are slim to none given the fact that we have been fighting for our rights in federal court since we became a state in 1890. That leaves the third option rarely used in United State’s history, state nullificationState nullification is simply that, the state nullifies the existing relationship. In other words, Wyoming would stop recognizing federal jurisdiction over Wyoming lands. It would take a strong minded governor, but it would not be that hard to do.
I will leave the legal issues of this process to the appropriate scholars to debate. Assuming that Rammell's idea is perfectly lawful, there is another problem that, frankly, overshadows the legal issue: this act is what Rammell proposes to end the big - and growing - deficit in the state budget. 

More revenue. 

That is not a conservative solution to our state budget problems. Wyoming has:

1. The highest Government Employment Ratio in the country,
2. The second highest excess compensation ratio for government employees of all the 50 states;
3. One of the most expensive K-12 school systems;
4. A pension debt that has already led to a credit downgrade; and
5. A budget deficit that is predicted to continue to rise, with a long-term projection $1 billion per fiscal year.

If all that Rammell wants to do is to increase revenue by seizing federal lands, then he cannot reasonably call himself a conservative. To protect government largesse by raking in more revenue is to bend over backwards for the tax-and-spend mainstream that is our state's current political leadership.

Rammell—whose key issue is seizing public lands from the federal government to open up to what he estimates would be $1 billion in state revenue from energy development—said “ENDOW is the biggest waste of money I can think of.”
It is good to know that he is against more spending, but what about existing spending programs? Here are four questions for Rex Rammell:

a) What do you think about school choice? 
b) If you want to get the federal government out of our state, why not reform Medicaid into a state-only program?
c) Where do you stand on tolling the I-80?
d) Would you, as governor, be willing to work with the federal government to make Wyoming an experimental economic freedom zone where federal regulations do not apply?

The answers to these questions may help us get a more detailed idea of Rammell's conservative credentials. 

Monday, May 21, 2018

Another Tedious Rant for Socialized Medicine

The American Conservative apparently thought it was a really good idea to publish an ill-informed flow of babble on why we need socialized medicine in America, penned by a lawyer who has written a book about Chelsea Brad Manning. Here is my response:

Sunday, May 20, 2018

How Rex Rammell could win in November

A big thank you to M Lee Hasenauer, whose town hall meeting in Cheyenne on Saturday scored Tax Pledge signatures from two more gubernatorial candidates. He reports that Bill Dahlin and Rex Rammell both signed the pledge at the meeting.

Well done, M Lee! Let us see what Sam Galeotos and Mark Gordon are going to do. I have been told by Galeotos staffers that he is opposed to higher taxes, and Gordon has indicated interest in the pledge.

Thursday, May 17, 2018

Socio-Economic Profile of Wyoming, Part 3

Yesterday we saw how the middle class is moving away from many parts of Wyoming. Today we are going to take a look at the flip side of that trend, namely the dependency rate on public assistance. I introduced that rate on Monday, calculating it based on the reported number of households who get Supplemental Security Income, public cash assistance and food stamps. This is a limited set of welfare, but it provides a good picture of how dependent households are on these programs.