Friday, March 31, 2017

School Funding: The Threat of Higher Taxes

On Monday, at 10AM at the Wyoming Oil And Gas Conservation Commission on 2211 King Boulevard in Casper, the Select Committee on School Finance Recalibration will hold its first meeting. This is one of the most important committees that our legislature has appointed in many years. Its purpose is, plainly, to come up with as much new revenue as they can to avoid reductions in K-12 education spending. 

This is no small task. Back in November the Joint Education Committee accepted a report suggesting that the state's budget deficit would reach $900 million in fiscal year 2022. The legislative leadership has never refuted this number, but I have...

Thursday, March 30, 2017

School Construction: A Budget Behemoth

On Monday, the Select Committee on School Finance Recalibration is holding its first meeting. It is in Casper at 10AM. Click here for the official announcement. This is an important meeting that deserves attention from every Wyoming taxpayer. This is, namely, the committee that is going to find new taxes, and raise existing taxes, to prevent cuts to school funding as far as ever possible. 

Let me spell out how important this committee is:

Tuesday, March 28, 2017

Another Look at the True Size of Government

One of the problems we have in Wyoming is that our state government is deeply fiscally involved with local governments. This is not unique to our state; it is a pervasive problem across the country. Likewise, the federal government is deeply involved with states, sending north of half-a-trillion dollars to state and local government coffers each year.

This is a problem that has been neglected by us in the public policy business, especially with reference to how it complicates reforms to government spending.

Monday, March 27, 2017

Wyoming Jobs Update

Time for another update from the labor market. The Bureau of Labor Statistics has published its state-level employment numbers for February. These are preliminary numbers for now, but usually there is not much adjustment to them once they become definitive.

A comparison of these latest numbers to the numbers for the month of February, ten years back, gives us a glimpse of the overall trend in our state's economy. As Table 1 explains, the negative trend continues:

Other Funds: Reply from Speaker Harshman

Returning to the Other Funds issue for a quick update. Over the weekend, Speaker Harshman replied to my article (sharing his reply with the legislature's official e-mails). I have invited him to write a full piece, which I hope he will do. If he does, I will publish it in its entirety, unedited and without comment. 

My motive for writing about this issue is, as I explained in the March 9 article, that when spending is rerouted through Other Funds, it tends to vanish from the public debate over government spending. The Speaker adds a valuable, informative perspective, as exemplified below by an excerpt from his reply.

Friday, March 24, 2017

A Fiscal Argument Against Legalized Pot

Thank you to the reader who sent a link to the Focus on the Family article!
I had planned to finish the week with the economic analysis of Obamacare reform, but since Republicans in Congress continue to do what they do best - fight each other - we will just have to wait with that one. 

Therefore, let me get to another topic that is of rising importance here in Wyoming. Matt Kaufman over at Focus on the Family explains:

Thursday, March 23, 2017

Putting Our Fiscal Crisis in Historic Context

In a couple of months, our legislators will begin preparations for the 2018 session by beginning to attend committee meetings. As they do, the state's budget crisis will inevitably rise to the top of their to-deal-with list, especially since the past session created a commission to find new options (taxes) for school funding. 

As I have explained before, the logical way forward would have been to appoint a commission for school-choice and educational-freedom reforms. That did not happen, which means that the fight to stop tax increases in our state is far from over. Therefore, we must combine efforts for sound spending reform with efforts to win the argument on the tax front as well.

Tuesday, March 21, 2017

U.S. Economy No Help to Wyoming

As the 2017 legislative session closed, it was clear that Wyoming had dodged a tax bullet - or a hail of tax bullets. This is good both short term and long term, first and foremost for our state's families and struggling businesses, but also for us as a state relative the rest of the economy. As I have explained on several occasions, the Wyoming economy is lagging behind the rest of the country on almost every relevant macroeconomic account: GDP growth, private job creation, personal income growth, consumer spending... We cannot afford to do anything that will put us further behind.

There is yet another reason for us resist big-government solutions to our economic problems.

Monday, March 20, 2017

Reforming Obamacare, Part 2

A reader suggested that Wyoming may already have its own death panel, namely the palliative-care council created by SF88, Senator Scott's bill that passed the state legislature this session and became State Enrolled Act 81. Technically, this council is not a death panel in the traditional sense. Its work is not tied to cost containment, and it is explicitly banned from discussing euthanasia. However, it is worth noting that once the palliative-care council exists, it can be reformed to become a formal death panel. 
On Thursday I explained the difficulties of reforming Obamacare. These difficulties should in no way prohibit Congress from carrying out necessary reforms, nor should they constitute an excuse for Republicans in Congress to settle for token reforms. This is not the time to rewrite the cocktail menu in the bar on the Titanic. What we need is nothing short of a complete repeal and a solid free-market replacement. 

Friday, March 17, 2017

A New Chapter for Wyoming - Updated Version

Upon reader request, here is an updated version of my vision for how to solve the fiscal and macroeconomic problems here in Wyoming.

A New Chapter for Wyoming

Sven Larson, Ph.D., Economist

Thursday, March 16, 2017

Reforming Obamacare, Part 1

This article, and another that is in the pipeline, are in response to a few questions from blog readers. Thank you!
Obamacare was a terrible idea from day one. Fortunately, President Trump is working hard with the GOP in Congress to build a reform framework. There is even a glimpse of hope that the reforms will eventually lead to a repeal. 

I hear the frustration among you readers on this issue, wondering why they cannot simply repeal the entire Obamacare structure overnight. In theory, Congress could do that. They could in fact shut down every entitlement program they wanted to, and do it literally over night. However, there are two reasons why Congress has never closed an entitlement program in the history of the American welfare state, and it is important to understand those reasons. 

First, there is the prevailing ideology of egalitarianism.

Tuesday, March 14, 2017

Corporate Welfare: A Jerky Idea

Suppose you offer a man the choice between a free Big Mac per day, and him having to get a job so he can buy that Big Mac himself.

What will he choose?

Well, if you listen to our state government, the answer to that question is "both". In fact, a majority of our legislators might even suggest that if you give a man a free Big Mac per day, he will work even harder to be able to afford that Big Mac on his own.

I am, of course, just a lowly economist, so I do not possess the insights into the higher intricacies of this world that are bestowed upon our elected officials...

Monday, March 13, 2017

Start Medicaid Reform Now

The 2017 legislative session will result in the appointment of a commission to develop a new structure for education funding. Hopefully, they will conclude that this is the right time to propose school-choice reform, and to make sure that our state can enjoy the substantial economic benefits of educational freedom. (I am worried, though, that they are going to come back for the 2018 session with an income-tax proposal.)

Education reform is not the only way ahead. Medicaid is another program that offers substantial benefits, both fiscally for the state government and for the Wyoming economy. 

One of the problems with Medicaid reform, though, is that unlike education, federal funds pick up a substantial part of the cost for Medicaid - 51 percent, to be exact.

Friday, March 10, 2017

Jobs Update: Negative Trend Continues

The Bureau of Labor Statistics has released county-level employment data for the third quarter of 2016. Before we take a look at it, here is what I concluded when I reported on this data for the first two quarters of 2016

a) We depend heavily on government in almost every county;
b) We are losing private-sector jobs in a way that is totally unsustainable; and
c) The minerals industry is only partly responsible for that job loss.

With the exception of government employment - which I will report on separately in a later article - the picture I painted back in February is, generally, still valid.

Thursday, March 9, 2017

Wyoming Other Funds Spending Up 180%

Remember Governor Mead's "bare bones" speech? Back in January he told the state legislature and all us taxpayers that there was nothing left to cut in the state budget. 

As the 2017 legislative session opened, the statists rode in on the same bull, confidently peppering the bill roster with proposals for tax increases. The fiscal conservatives were able to eke out a victory and stop all of them, but only after a down-to-the-wire fight against the last remaining half-percent sales tax increase. 

Kudos to our fiscal conservatives. That was a job well done.

Tuesday, March 7, 2017

The Economic Benefits of School Choice

The debate over school choice often focuses on principled arguments, such as individual and parental freedom, religious rights, etc. These are important arguments and they should be considered first and foremost in the school-choice debate. However, that does not mean that the economic issues are to be ignored - on the contrary. Given the economic crisis here in Wyoming, we must take into account the economic aspects of any kind of government-spending reforms. If we can combine principled arguments for school choice with good fiscal and macroeconomic arguments, then obviously we have a winning recipe.

The fact of the matter is that school choice could be an economic boom for Wyoming.

Monday, March 6, 2017

Tax Hikers Lost - Now It's Your Turn

So common sense prevailed, eventually. The Engrossed version of HB236, voted on by the Senate on Thursday, still proposed a half-percent sales-tax increase (page 17, line 12). However, the enrolled-act version, HEA125, no longer has any language about a sales tax. It is good to see that our legislature finally, in the eleventh hour of the 2017 session, came to its senses.

The tax hikers in the legislature will most certainly hold the fiscal conservatives accountable, saying things like: "Alright, you got what you wanted - no tax hikes. So what's your alternative?" Fellow fiscal conservatives - this is where the real job begins for us. What we have seen so far is only the preamble to the real battle for our state's future. Now it is time for us to step up to the plate and present our solutions.
Do not for a moment think that this is over.

Friday, March 3, 2017

Back to the "Old Normal"

Now that most of the legislative attempts at raising our taxes have died, it is time to start focusing on the alternatives to tax increases. The tax hikers in the legislature will most certainly hold the fiscal conservatives accountable, saying things like: "Alright, you got what you wanted - no tax hikes. So what's your alternative?"

Fellow fiscal conservatives - this is where the real job begins for us. What we have seen so far is only the preamble to the real battle for our state's future. Now it is time for us to step up to the plate and present our solutions.

Last week I published a to-do list, A New Chapter for Wyoming. In the coming weeks I will roll out more articles with more details and more analysis to back up this plan and make it legislatively appealing. But I am just one voice - an independent economist - and I cannot be the only one doing this.