Tuesday, November 29, 2016

How To Cut Taxes by $1.5 Billion

In yesterday's blog article I reported on the campaign to raise your taxes. Among the points I made:

Monday, November 28, 2016

The Campaign to Raise Your Taxes

The campaign to raise your taxes is on. On Saturday, the Casper Star Tribune declared:
Political watchers sometimes joke that Wyoming is the most conservative socialist state in the nation. In other words, residents want quality schools, well-paved highways, low fees to register their vehicles and good government services. But they refuse to pay much in taxes. A new University of Wyoming study shows that the disconnect between the demand for government services and the aversion to taxes persists to this day, even as the state faces serious economic troubles. 

Tuesday, November 22, 2016

Personal Income Data Suggest Weaker Economy

The Bureau of Economic Analysis has released new data on personal income. This data can give us a great deal of information on how our economy is doing, especially when put in the context of other data, such as private consumption and entitlements paid out to Wyoming residents.

First, the update on personal income itself. In 2015, Wyoming residents earned $32.9 billion in personal income, up 3.1 percent from 2014. We paid $3.7 billion in personal taxes, leaving us with a disposable income of $29.2 billion, a 3.4-percent increase in money available in household checkbooks from 2014. 

Monday, November 21, 2016

Internet Sales Tax: Bad Idea for Wyoming

Here we go:
A committee of state lawmakers voted Friday to advance a bill that would require large online retailers to collect sales tax on purchases made by Wyoming customers. Members of the Legislature’s Joint Revenue Interim Committee voted to send the bill to the full Legislature when it convenes in January. Supporters of the measure say such a law would even the playing field for businesses in Wyoming. That’s because customers may be inclined to buy items online instead of at Wyoming businesses to avoid paying sales tax.
Nonsense. This has nothing to do with leveling the playing field. 

Friday, November 18, 2016

Wyoming Needs A One-Year Sales Tax Holiday

As I have explained in several different blogs and elsewhere (are you keeping up with my monthly KGAB AM650 appearances?), the Wyoming economy is in bad shape. We have lost jobs uninterruptedly for almost a year and a half now; state GDP has been weakening for a year; 17 of our state's counties have lost private-sector wages in the last year; etc.  

In addition to the growing economic pains at the ground level, the state budget is in the red with no end in sight.

The long-term solution to this problem is a series of structural spending reforms:

Thursday, November 17, 2016

Jobs Lost for 17 Straight Months

Jobs creation is one of the essential measurements of the strength of an economy. When no new jobs are being created, many analysts focus on the unemployment rate as a way to find out how weak the economy actually is. This, however, is an inexact measure for a state; it works well for countries where the in- and outflow of labor across the border is legally, culturally and economically limited. A state does not have those limitations on the flow of people across its borders. Therefore, when there is a decline in a state's economy, the unemployment rate often remains low simply because of outbound workforce migration. 

Wyoming is a good example. Our unemployment rate still is relatively low, despite the major decline in economic activity in our state: as of September, the rate was 5.3 percent. This is way too low for an economy where GDP is in decline and major industries have recently been cutting jobs, and done so brutally.

Tuesday, November 15, 2016

Egalitarianism and the Budget Crisis

As we draw closer to the 2017 legislative session, the pile of questions for our legislators keeps growing higher, especially regarding the state's budget crisis. So far, the conversation about the deficit and possible remedies has been limited to the governor's discretionary reductions, by means of which Governor Mead seems to believe that the state can white-knuckle it through a temporary reduction in revenue.

Recently, the governor has demonstrated insight into the permanent nature of our budget crisis, but thus far it has been limited to measures for the promotion of industrial diversification. Those are good, long-term ambitions, and limited as they are he nevertheless deserves recognition for them. However, it will be years before those measures can deliver anything close to tangible budgetary results for the state.

What our state needs is a coherent, coordinated and principled strategy both for the short term and for the long haul. 

In order to lay out such a comprehensive strategy, our legislators need to ask themselves one basic question:

Monday, November 14, 2016

State Economic Index Verifies Downturn

Last week, the state's Economic Analysis Division released the November edition of its Wyoming Economic Indicators (WEI). The report, which is technical in nature, does not editorialize its statistical message. That job is left for the media to do. For example, KGAB reports:

Friday, November 11, 2016

Mead's ENDOW Plan: A Step Forward

Good news this Friday morning: it looks like Governor Matt Mead is now taking our state's economic crisis seriously. KGAB reports
Wyoming Governor Matt Mead has launched a new initiative to diversify the state’s economy. The Economically Needed Diversity Options for Wyoming Initiative, or ENDOW, will coordinate and expand ongoing efforts across the state, as well as produce measurable results expanding Wyoming’s economy. “We need immediate and measurable results now,” said Mead during the Governor’s Business Forum in Cheyenne on Thursday. “We need to build on recent success in establishing technology as a fourth leg of Wyoming’s economic strength; efforts to add value to coal, minerals and natural resources; and on our success in a growing manufacturing industry,” added Mead. Mead says many economic studies and plans over the years really haven’t addressed issues that are still pressing in 2016.

Thursday, November 10, 2016

Diversifying the Wyoming Economy

With Donald Trump elected as our next president, hopes are rising for a rebound in coal production. Trump, who has vowed to end the war on coal as soon as he takes office, is certainly going to make life easier for the coal industry in Wyoming. That is good news of course; every private business should have the chance to compete on its own terms rather than having to jump through government hoops or run through a labyrinth of regulations (especially if that labyrinth ends with a brick wall).

However, as I have said before, even if President Trump will repeal all Obama's regulations on his first day in office, and even if the repeal is not met with court challenges by the environmental movement, it is feeble to bet our state government's budget on a new coal rally. In the past few years natural gas has to a large degree replaced coal in electricity production, and the demand for coal for other purposes has not made up for that decline. 

Tuesday, November 8, 2016

Growing the Welfare State in Wyoming

On this the fateful election day of 2016, when the country ponders whether to part completely with the founding principles of our constitutional republic, or to give those principles another chance, it is a good time to think a bit about what Wyoming would look like if the proponents of unabridged government actually ran this state. 

To many Americans in general, and to Wyomingites in particular, the Scandinavian welfare state seems like a very distant fairy tale that has little if anything to do with our daily lives here out on the prairie. But the truth is, that welfare-state model has already made big inroads into our state, both in terms of strictly federal programs such as Social Security and Medicare, and in the form of all the entitlement programs that the federal government and the state pay for together. 

Monday, November 7, 2016

Employment and Earnings in Wyoming

In tomorrow's election, a lot more is at stake than who the next president is going to be. Regardless of whether Donald Trump or Hillary Clinton becomes our nation's next chief executive, the economic crisis in Wyoming is going to be there for our legislature to deal with. Yes, Trump has said that he is going to lift all regulations on coal that Obama has put in place, and that will certainly be good for the coal industry in our state. But as I explained recently, even under such favorable circumstances, it is foolish to bet our state's budgetary future on the hopes for a coal rally

Besides, does anyone really believe that the environmental industry and all its campaign arms will suspend their activist activities just because Trump repeals Obama's War on Coal regulations? Expect years of court battles and, at best, slow progress for the repeal efforts. 

I do not mean to sound overly pessimistic, but as an economist I live in the world of probabilities. As much as I might, personally, wish for Donald Trump to be able to restore the Wyoming coal industry to its historic heights, I cannot disregard the realistic factors that very likely put hurdles in the way of his policy ambitions. 

Friday, November 4, 2016

Amendment A: Wishful Budget Cosmetics

When the M/S Titanic was taking in water, that fateful night in the North Atlantic, did the captain order full speed ahead? No. He stopped, assessed the situation and tried to find a solution. 

In his case, there was none. Mathematically, the Titanic was doomed. 

When a government is hemorrhaging money, the exactly wrong thing to do is to order full speed ahead. The right thing to do is to pause, assess the fiscal crisis and find appropriate solutions. 

Unfortunately, the captain and bridge crew of the M/S Wyoming have not yet stopped to make that assessment. The governor and the legislature forge ahead, as if they were trying to ignore the hole in the budget. 

Now they have a new tool to help them. Amendment A, proposing a quicker, easier way to invest state savings in the stock market, has an air of full-speed-ahead thinking built into it.

Thursday, November 3, 2016

How Big Is State Spending - Really?

Many years ago, when I was working for a think tank in North Carolina, I had one of my first experiences with the convoluted world of state government spending. Over a period of six months I worked with another analyst on trying to nail down exactly how much money the state of North Carolina was really spending every year. We had an even greater problem finding out exactly how many people were on state payroll, one way or the other.

You would think that these things are obvious and transparent, and that you could "just ask someone" who would then pull up the right number in an instant. Unfortunately, that is not how it works. 

After my experience in North Carolina I was hired as research director at the South Carolina Policy Council. Inadvertently, I immediately stirred up controversy over state spending: I came in to a meeting with some state legislators with a printout of their total outlays for the last fiscal year, pointing to the total number of $21 billion. My boss gasped, embarrassed at me apparently presenting the wrong number. 

"No, no, it's only $7 billion" was the reaction from everyone else in the room. 

Tuesday, November 1, 2016

Making Budget Priorities: The HD11 Debate

Last week, on October 25, the Democrat and Republican candidates for HD 11 met for a debate. The incumbent Democrat, Mary Throne, and her challenger Jared Olsen had a pleasant conversation that, in many ways, was the poster child of civilized Wyoming politics. 

There was one part of this debate that made it especially interesting, namely when Throne and Olsen discussed what to do about the state budget crisis. While it was not possible for them to exhaust the issue in this debate, their answers did pave the way for a more principled discussion about the role that government should - or should not - play in our economy.

Both candidates recognized that we do have a budget crisis. That is an important step in itself; only six months ago it was almost impossible to find either an incumbent or a candidate for the state legislature who was willing to admit to any such thing. Even better: while not presenting actual legislative ideas, both candidates laid out the foundations for how they would like to see the state address its budget crisis.