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:

according to data from the Bureau of Economic Analysis an average private-sector job in the United States is compensated at $47,800 per year. This is an average for full-time and part-time jobs. In Wyoming, the same number is $40,400. Not only do private-sector jobs pay $7,400 less here in Wyoming, but those jobs are increasingly hard to come by these daysOutside of the shrinking but still well-paying minerals industry, a private-sector job pays, on average, $36,000 per year. Can someone arguing for higher taxes on Wyoming families please tell me how much more of those $36,000 a person can afford to surrender to government? What should they give up in their family budgets? What can they afford to live without for the long haul, so that government will not have to make any long-term sacrifices?
I also explained that if we reduced the size of our government workforce to the same size, relative the private workforce, that Nebraska has, we would have 18,500 fewer local-government employees, and 5,800 fewer state government employees, on taxpayers' payroll. 

How much money would this save Wyoming taxpayers? Well, an average state government job pays $72,855; multiplied by 5,800 jobs, this amounts to just over $422.5 million. On the local-government side, 18,500 jobs at $68,194 each, adds up to $1,261.5 million. The potential savings total $1,684 million.

In other words, almost $1.7 billion. 

If we take into account that 24 percent of state spending is paid for with federal funds, and 35 percent of local government outlays are funded by the state, the bottom line changes a little bit: total taxpayer savings end up about $100 million lower, with the state reducing its expenses by $763 million and local governments by $820 million.

Still, the bottom line is that if: 
  • Wyoming had the same government-to-private workforce ratio as Nebraska does, and
  • we take into account the current and projected deficits in the state budget,

...we could still almost eliminate the severance tax on the minerals industry. On top of that we would reduce local government spending enough to eliminate local property taxes.

Yes. If Wyoming had a state and local government sector that was comparable to Nebraska, we the taxpayers could reduce our property-tax burden by, on average, 75 percent. Furthermore, the state could almost eliminate the severance tax. 

Here is a question for Governor Mead, incoming Senate President Bebout and incoming House Speaker Harshman:

What extra services do we Wyomingites get from our state and our local governments that the Nebraskans are doing without - services that apparently are worth over $1.5 billion to us as a state?

You should give this question serious consideration during the 2017 legislative session. 

Why? Because so far the debate over how to deal with the state's budget deficit is lopsided in favor of higher taxes. As I explained yesterday, there is a campaign with growing momentum to weaken the Wyoming taxpayer's resistance to tax hikes. In their Saturday piece on the need for higher taxes, the Casper Star Tribune made a big point out of a "disconnect" between what Wyomingites are willing to add to their current tax bill, and what the state needs in order to continue spending as usual.  

It is then implied that this "disconnect" is due to lack of understanding among taxpayers of how much they are getting subsidized by the minerals industry, and how much they therefore should be willing to chip in to plug the hole in the state budget. 

The problem with this rhetoric is that it falsely portrays regular Wyomingites as ignorant in terms of what they pay for government, what they get back and what they can or cannot afford. 

What if this "disconnect" is really a rational expression of what Wyoming taxpayers know about their own finances and whatever room they have for higher taxes? 

What if Wyoming taxpayers really cannot afford to replace the lost severance taxes? Then what will the advocates for higher taxes do?

I fear that the state legislature is going to move ahead with a fiscal agenda for the 2017 session that only asks the question of how they can raise revenue. It is too early to judge the new legislative leadership and the new member configuration of the Revenue and Appropriations committees, but they better approach the state budget crisis from a fiscally conservative angle. Any other approach will delay proper action on the spending side and bring Wyoming closer to the point where fiscal panic supersedes rational legislative action.

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