Saturday, December 31, 2016

Protecting Big Government At All Cost

The legislature is slowly letting us know more about what it wants to do about our state's fiscal crisis. On the upside, we now have more details about what to expect - are you surprised to hear that those details include higher taxes? On the downside, though, we also have a clearer idea of the overall legislative strategy, and sad to say, it is entirely concentrated on preserving status quo, i.e., saving big government at all cost.

The document giving away this strategy is from a subcommittee under the Joint Education Committee. Called the Subcommittee on Education Deficit Reduction Options, it released a White Paper on December 29 detailing its thoughts on education funding in response to the state's fiscal crisis. 

Thursday, December 29, 2016

What Wyoming Can Learn from Illinois

Sales tax revenue are down across the state. KGAB reports:
The latest report on Wyoming’s economy shows some hopeful signs for the energy industry as well as bad news about sales tax collections. Senior State Economist Jim Robinson says the bad news is that state sales tax collections are down by almost 16 percent for the first five months of Fiscal Year 2017 compared to the same time in FY 2016. Campbell County sales tax collections are down by a whopping $16.4 million over that period compared to the year before, while Natrona and Sublette counties are each down by $5.9 million using the same comparison. Among the state’s 23 counties, only Teton and Washakie counties show an increase in collections for the first five months of FY 2017 compared to the same time a year ago. 

Wednesday, December 28, 2016

How HJ2 Comes Home to Roost

Our state government's budget crisis is getting bigger by the day. In just a few weeks the official deficit forecast has increased from a $400 million in 2018 to $720 million in 2020 to $1.8 billion in 2022.

The first two numbers are real. The $1.8 billion is a scarecrow that is supposed to make you write a blank tax check to the state. 

Monday, December 26, 2016

Feeling Guilty Enough to Pay More Taxes?

On Christmas Eve, the Casper Star Tribune ran another story about how the state's budget deficit is really a problem with funding education:
In 2016, Wyoming’s education funding slid into full crisis. With the state in an energy slump stretching into its second year, schools face shortfalls of roughly $700 million in the next two-year budget cycle. Roughly 70 percent of Wyoming’s tax base comes from minerals. When oil, gas and coal prices fell, local and state funding for education fell with them. 
There is no doubt anymore that this is a well-orchestrated messaging effort, pumped out through a central-heating system like the hot air warming your house on a winter night. 

Turn Private Sector From Decline to Growth

My blog article on December 16 about a 6.6-percent decline in the Wyoming GDP has earned quite a bit of interest. It is now the second-most read article on this blog - thank you! - and I can certainly see why: nobody else is discussing this side of our state's economy. 

The point behind that blog article was to ask, rhetorically: if the legislature and Governor Mead want to raise taxes to close the budget deficit, then what part of the economy is going to pay those taxes? 

Thursday, December 22, 2016

Prosperity Districts and Predatory Capitalism

It is well established that economic freedom and limited government is the best path to prosperity. Big government is an enduring impediment to economic growth, and has been so ever since the idea was invented that government should engage in economic redistribution among private citizens.

It is equally well established that economic freedom requires a certain level of order and predictability in public institutions in order to function. The institutional framework needed to secure the blessings of economic freedom are not very extensive - on the contrary, all government has to do is protect the life, liberty and property of individuals and businesses, and the free market and free, voluntary interaction between citizens can take care of the rest. 

This sounds simple enough, but it is not. 

Spending Reform, Part 3: Medicaid

On Tuesday I presented some numbers indicating how big savings our state could see if we reformed our health care and health insurance industries here in Wyoming. I also pointed out that we might want to await the incoming Trump administration's proposal for how to "repeal and replace" the Affordable Care Act. This last statement surprised some readers, two of whom asked if it is not worth the while to go about these reforms at the state level. 

Tuesday, December 20, 2016

Spending Reform, Part 2: Health Care

Health care is one of the few parts of the Wyoming economy that is still growing. October of this year marked the 34th straight month with year-to-year job growth in health care and social assistance. The growth is not strong, however, at times barely statistically visible. This is not surprising, given how the rest of the Wyoming economy is doing

At the same time, health care is an industry where relatively mild government reforms could make a big difference to the Wyoming economy. 

To see the potential in health reform, we need to include both health insurance and health care production. There are interesting reform potentials in both areas.

Monday, December 19, 2016

Spending Reform, Part 1: School Choice

Education is becoming a hot topic in the debate over the state's budget crisis. Governor Mead has made clear that he believes the budget deficit to be entirely related to education. That is not true, of course - the deficit is the cause of a general revenue crisis - but let us assume for a moment that the governor is correct. 

Suppose that our public education system is suffering from a free-fall deficit problem, and that government has become structurally unable to fund our schools. What is the logical solution?

Friday, December 16, 2016

Wyoming GDP Down 6.6 Percent

Upon request from several readers, I will set aside next week for a series of blogs on reforms to government spending, and their positive effects on the Wyoming economy. Before we get there, though, we need to take a look at some state-level GDP data.

Most states are doing well. In the second quarter of 2016 - the latest data available - a total of 14 states had more than two percent in GDP growth over the same quarter a year before. This is good, given that the national economy only mustered 1.2 percent growth. All in all, 37 states enjoyed positive growth, though the 37th, Pennsylvania, barely climbed above the line with 0.08 percent...

Thursday, December 15, 2016

The Case Against a Corporate Income Tax

Can we get Wyoming out of its fiscal trouble without raising taxes? I sure hope so. With a private sector that is practically hemorrhaging jobs, and most of those jobs being lost outside the minerals industry, the absolutely last thing we need is more burdens on businesses and families here in the Cowboy State. 

Unfortunately, both the governor and the incoming legislative leadership appear to have made a deliberate decision to frame our budget crisis as a crisis in funding education. It is not. It is a general budget crisis that has its origin in too much permanent spending. 

Wednesday, December 14, 2016

Fiscal Reforms and Legislative Mechanics

I receive comments and correspondence from legislators on a regular basis. This morning one of the e-mails asked me about the legal side of privatizing the University of Wyoming. The prevailing opinion is that since it is a land grant university, it should be impossible to privatize. My answer to the legislator could interest all readers of this blog, so here it is.

Tuesday, December 13, 2016

Downward Jobs Trend Continues

In November I reported that Wyoming had seen 17 months straight of private-sector job losses. Since then, the Bureau of Labor Statistics has released another month of state-level jobs data, and the update for Wyoming is as one could expect: we are now at 18 months straight of losing jobs in the private sector - and it is not just minerals.

To begin with, the BLS has updated the jobs numbers for September, adjusting total private employment downward from 214,000 to 213,400. In other words, final numbers show that the job-loss trend is a little bit worse than what I reported in November.

Now, let's add the October numbers to my report from last month. First, the decline in private-sector employment (over same month previous year):

Monday, December 12, 2016

Governor Admits Deficit at $720m

This morning Governor Mead gave his budget address to the Joint Appropriations Committee (JAC). Overall, it was an encouraging performance by our state's chief executive, in particular because he invited all Wyomingites to a discussion about the state's fiscal future. And the governor updated the budget forecast with a new outlook that deserves more attention than he gave it.

More on that in a moment. First, we need to straighten out what Governor Mead really thinks about the state's fiscal problems, and in particular how big - or small - those problems are. As a lead-up to handing over the document, the governor announced his main intentions to the Casper Star Tribune:

Friday, December 9, 2016

Democrat Comeback: More Corporate Welfare

In the November election, the Democrats suffered one of their biggest losses in recent memory. It was not so much the presidential and Congressional elections that hit them hard, although it really hurt them that Secretary Clinton did not become our 45th president. No, the real defeat for the Democrats took place at the state level, where Republicans expanded on their already-impressive gains from 2014: the Republican party now controls both legislative chambers and the governor's office in 25 states, up two from 2014. Democrats, on the other hand, have the same "trifecta" control in six states, down from seven in 2014.

Thursday, December 8, 2016

Win-Win: Privatize University of Wyoming

Just as we feel the first pinch of winter Arctic cold, the temperature in the debate over the state's budget problems is rising to new levels. The University of Wyoming, which gets a quarter of a billion dollars annually from the state, is working on a strategic plan that could turn into a plea to shield the university from further budget cuts in the coming legislative session. The Wyoming Tribune Eagle has the story:

Tuesday, December 6, 2016

A Conversation about Wyoming's Future

My blog articles about the campaign to raise your taxes ("The Campaign to Raise Your Taxes", "How to Cut Taxes by $1.5 Billion" and "$400m Deficit: See I Told You So!") has drawn both praise and scorn. I appreciate the support and encouragement from you blog readers - thank you and keep up the good work in your communities.

The one part that bothers me is that the conversation about the serious economic situation in our state seems to bring out the worst in some people. As an example, I got an e-mail from an influential legislator, sent over his private e-mail but signed in his official capacity as a representative of the people in his House District. The highlights of the e-mail are as follows:

Monday, December 5, 2016

Privatize Our School Buildings

Governor Mead is getting some well-deserved attention for taking the state's fiscal crisis seriously. KCWY13 in Casper reports:

Thursday, December 1, 2016

$400m Deficit: See I Told You So!

Never bark at the Big Dog. The Big Dog is always right. 

Six months ago I testified before the Revenue and Appropriations committees, telling them that in Fiscal Year 2018 we could have a budget deficit of $350 million if nothing was done about it. Some committee members shook their heads, laughed and dismissed my forecast. 

Well, they are not laughing now, are they?