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Monday, October 23, 2017

WyoFlot Is Grounded

Today, I drove up to Casper to testify before the Minerals and Economic Development Committee. Five hours on the road, round trip, for a quick public comment on the WyoFlot bill that was supposed to go to the legislature as a committee bill.

It was worth it. After supportive testimonies from Mr. Swelbar, the consultant, and the Aeronautics Division of the Wyoming Department of Transportation, a couple of more supportive voices were heard in the public comments section. I was the only critic.


After the public comments were closed and the committee adopted an amendment to the bill, proposed by Senator von Flatern, the committee eventually voted. With eight votes to six, the WyoFlot bill died.

This is a good day for Wyoming taxpayers and for small businesses already struggling with taxes, fees and regulations to remain in our state's tough economic climate. 

With all that said, let us not kid ourselves and believe that this idea is dead and gone forever. Governor Mead wants WyoFlot - it is the flagship proposal from his ENDOW group - and there was enough support in the committee to warrant another try from state airline supporters after the legislative session. With an equally statist-minded governor after next year's election, this idea could easily surface again in the 2019 session.

Here are the four main points from my testimony:

1. There is no macroeconomic analysis behind the idea. Nowhere can we find an even remotely credible effort at estimating what investments we may see, from businesses, as a result of WyoFlot. Likewise, none of the supporters of WyoFlot have attempted to perform a Cost Benefit Analysis of the investment, a procedure that is otherwise standard in business as well as in more responsibly run governments. 

2. We have not seen any analysis that explains the operating cost and benefit of WyoFlot under the assumptions and conclusions drawn by its supporters. WYDOT suggested in their testimony that they have calculations showing a positive effect on airport operations from the WyoFlot project, but those calculations do not seem to be publicly available. Therefore, it is impossible to verify their solidity.

3. A project with such macroeconomic, fiscal and financial uncertainty should at the very least come with a firm and non-negotiable cap on the commitment of tax dollars over time. No such commitment exists, hence there is no incentive for the parties involved to work their way toward profitability for the project. 

4. By investing in the airline, with commitment of taxpayers' money, the state would have to raise taxes before the airline project is even up and running. This raises the threshold for businesses to invest in Wyoming; the project to incentivize such investments would defeat its very own purpose. 

Please note that I am not saying that we don't need airports in our state. Not at all. But let those airports follow a model developed by my good friend Chris Edwards over at the Cato Institute. It is realistic and opens for a combination of better commercial air services and - lo and behold - lower taxes. 

For now, WyoFlot is grounded. It has not even been cleared to leave the terminal. A good day for Wyoming. Now, let's get back to work on reforming and downsizing our government

3 comments:

  1. Any idea on how those on the committee voted?

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  2. Sven,

    First, I agree with you that Wyoming State Government is bloated. I have little in the way of suggestion on how to begin to digest and dispose of the elephant.

    But I think your critique is misaligned. You need to clarify why a macroeconomic analysis is important here. The University of Wyoming has done several economic benefit studies on the impact of airports on different markets around the state. Why they were not presented, I have no idea, but they have been part of the discussion in the past. Generally, they have indicated that a positive ROI is almost always achieved in the Wyoming communities with commercial air service (but then again, we're dealing with economists).

    From a funding standpoint, that purse will always be tied to the legislature. While loose at times with the revenues, I do not feel they are a bottomless pit on any project. I would also rather they spend it on air service vice the Wyoming Business Council or some other giveaway. At least the benefit is more evenly applied. I think you need to start looking for ways to whittle down bloat by providing the legislature with alternatives, vice scorched-earth austerity.

    I can tell you from a conditions setting approach, that many communities (including mine, the Riverton market) need a jump start in access to the outside world. Privatization is a great rejoinder, but in an economic desert as we are out in western Wyoming, it's a pipe dream.

    As part of the medical community, this is critical for attracting physicians. No doctors is not a real starter for other business growth. It also makes it difficult to attract outside monies for other business investment. But that is just one small example. I am sure if the opportunity is big enough, someone will drive to it. But what about the more varied and larger pool of medium and smaller opportunities? Realistically, this pool is what actually fuels a more diverse and healthy economy.

    I am not convinced by your argument that the opportunity cost is outweighed by the burden to the state and the taxpayers. Looking at the tax and regulatory burden inflicted on the public here, we are still a lot better off than most of our regional and national peers. Granted, it is a slippery slope, but probably less so than some of the other projects the state has touched.

    Come out to western Wyoming. Your critiques are valuable, but from the economic engine of Gillette, your perspective is warped and not fully representative of the entire state.

    ReplyDelete
    Replies
    1. "The University of Wyoming has done several economic benefit studies on the impact of airports on different markets around the state. Why they were not presented, I have no idea, but they have been part of the discussion in the past."

      I am not going to comment on some analysis that may or may not exist.

      Delete