I have said it before, and I will say it again: this upcoming legislative session is a do-or-die moment for Wyoming.
As 2018 approaches with frightening speed, let us take inventory and see where we are at today. Here is a quick rundown of our economic problems, our political hurdles and some of the solutions that can bring us back on track to prosperity and growth.
1. Our economy is weak. We have among the weakest, slowest growing state economies in the country. This is partly because of the downturn in minerals, but only partly. Jobs outside of the minerals industry pay poorly - the average compensation is $37,000 per year - which shows that we have not been able to encourage a strong secondary industry in our state. In fact, looking at the composition of our state's economy, the second largest industry, after minerals, is actually government.
2. Our job market is skewed. We have the largest Government Employment Ratio of all states, and during the Great Recession our state and local governments increased their employment more than in any other state. We also have one of the largest compensation gaps between government and the private sector. The size of our government is in itself a stop block for private-sector growth. In many parts of the state, private businesses can't compete with government salaries and benefits; it has been much more attractive to get a comfortably paid job with the state, the school district or the city than to take a lower-paid job in the tax-producing sector, a job that is at the mercy of the free market. That has changed recently, but only in the form of a slight decline in government employment; the overall structural imbalance remains.
3. Regulations galore. Every time I talk to small business owners around the state, I hear the same story: regulations of all kinds interfere with their business plans, their operations and their desire to expand. Certified professionals need to take yearly classes that often have very little to do with their professional skills and abilities, but maintain jobs for "instructors" and rake in cash for the state. Regulations at the county level, which obviously vary from county to county, sometimes make it prohibitively costly for a business to cross county lines to compete for projects. This reduces competition for projects where the cost is already marked up by regulatory incursions. Higher costs due to regulations and lack of competition means a local economy is poorer than it otherwise would be.
4. Expensive schools and health care. We have one of the most expensive K-12 education systems in the country, and no, that is not because we are a rural state. Even if we compare to Montana, Alaska or the Dakota states, we still end up ahead and above them. Education, again, is no exception. Furthermore, our health care system is undergoing a creeping socialization, which I have documented in two articles, part 1 and part 2. Private competition is being marginalized, while costlier government hospitals are taking over. This trend is going on without so much as a whisper in the public arena.
1. Governor Mead. I hate to say this, because Matt Mead is a nice guy, but he has become a real obstacle to good, meaningful reforms to our economy. He is obsessed with spending more of taxpayers' money, his latest budget being no exception, and he has apparently decided to hinge his gubernatorial legacy to the wasteful ENDOW wagon (or airplane). What happened to the Governor Mead who stood up for fiscal restraint in his first years in office? Where is the Governor Mead who broke with his predecessor's shameful spendoholism?
2. The field of candidates for 2018. As of today, with officially declared and likely candidates, my money is on Mary Throne being our next governor. That would, of course, take our state in exactly the wrong direction, but likely Republican Mead Wanabes like Mark Gordeon, Ed Murray and Cynthia Cloud aren't exactly much better. Now, there is always a Taylor Haynes to be reckoned with, but we have not heard from him yet. Besides, I hear whispers about a dark horse on the Republican side, and if the name echoing in those whispers is correct, the outlook on the 2018 gubernatorial election is going to change dramatically for the better. Until we know for sure, though, the crop of candidates we have is to be considered a political hurdle to a better economy.
3. Taxmageddon. Throughout the fall, the Joint Revenue Committee has been cowardly putting off votes on big tax-hike items from their Taxmageddon list. They have decided not to move forward with a higher tax on beer, and they have said no to a gigantic increase in the wind tax. Yet their list of destructive tax increases is still long, including but not limited to a hike in the property assessment value, an increase in the sales tax and a new sales tax on services. In addition, the ENDOW project will need its own tax hikes, and the Transportation Committee is piling on more taxes as best it can (and I will take a closer look at their tax-hike proposals next week).
4. Conventional thinking. Overall, there is very little entrepreneurial thinking among our legislators. This is a general observation, not an indictment of individual members of the legislature. Nevertheless, it has the inevitable and highly regrettable consequence of precluding the advancement of good reform ideas. We need more entrepreneurs and Regular Joes in the legislature, to join the common-sense minded lawmakers who are in there today, fighting rigid-minded legislative conventional wisdom.
1. A better governor. This goes without saying, but we need a governor who is willing to tackle our state's regulatory behemoth and who is willing to consider unconventional approaches to structurally reducing the size of our government. Wyoming does not have four more years to waste; if our next governor is another tax-and-spend Mead, or a tax-more-and-spend-faster liberal, then I dare not even think about the consequences.
2. More fiscal conservatives in the legislature. I hear persistent rumors that Senate President Bebout is going to stand like a rampart against Taxmageddon. I hope these rumors are true, and if so, I hope there are enough like-minded legislators who can rally behind him. If he fails, and Taxmageddon makes it through both chambers, it is a safe bet that Governor Mead will sign more than $450m in tax increases into law - to take effect already next summer. The fiscal conservatives in our legislature need our support, now more than ever, and we need to elect more of them next fall.
3. A new chapter for Wyoming. Without repeating the details of my already-published plan for reforms to education and health care (among other things), here is a quick review of what we need to do to get our state back on track to prosperity:
--Efficiency reform of our entire state and local government sector. The Alvarez and Marsal report suggested savings close to $200m after reviewing part of the state government. We can easily increase that number north of $500m if we do the proper efficiency reforms throughout both the state government and our local governments. This would not save our state, not by a long shot, but it would give us invaluable fiscal gains for the future, and it would reset the mindset that currently dominates the appropriations process in our government sector. Rather than maximizing cash flow and cash stashed in the bank, our government would persistently try to minimize its fiscal footprint.
--Transparency 360. We need a transparency reform that opens all government books. This way we can all see exactly how our tax dollars are being spent, keep track of wasteful spending and encourage government when it is doing things the way we like it.
--Educational freedom. By giving parents the right and ability to choose what education their kids should get, we will substantially lower the cost of K-12 education throughout our state, without jeopardizing the quality of education. In fact, a school-choice model would encourage good teachers and visionary administrators in our current public system to start their own schools. Without the rigid regulations governing today's K-12 system, they would most certainly thrive professionally while helping taxpayers save money, parents feel empowered and kids still get a high-quality education.
--Medicaid vouchers and market-based health care reforms. Congress has done the absolutely worst of Obamacare - maintained the stifling, exceptionally expensive regulatory behemoth but repealed the individual mandate - the costs of Medicaid will rise dramatically. So will the cost of uncompensated care at our hospitals. The funding fallback is always on taxpayers' shoulders. There has never been a better time for Wyoming to get out of the federally run Medicaid program, create a voucher system and allow Medicaid enrollees to buy certified health insurance plan across state lines. If, in addition, we roll back the crawling socialization of our health care system here in Wyoming (something that would have to come with a general deregulation of the system), we can drastically lower the cost of delivering health care to everyone here in our great state.
--Toll the I-80. Some 80 percent of the traffic on I-80 is not intra-Wyoming, which means that our tax dollars go toward paying for a service that out-of-staters enjoy. If we had a minimal-state government that only provided protection of life, liberty and property, and infrastructure, a toll-free I-80 would not be a problem. However, today's state government is trying to do everything from educating our workforce (in duplicate or triplicate systems) and filling the skies with commercial jets, to advertising in European media. With such a sprawling, and therefore very costly, state government, we cannot afford to give more freebies away. If we toll the I-80 and create a public-private partnership for its continuous operation and maintenance, we can get it out of the state government budget while improving its quality (the best highways in this country are toll roads).
This is a package of core reforms we need to do in order to put our state back on track to prosperity. It is a long list, and a bold one that will be both liked and disliked, but in politics, while popularity may win elections, it does not create prosperity.
The first step is going to be the legislative session. It will be a tough one, probably the toughest in recent memory. But that is no reason to be discouraged. On the contrary, it is time for us fiscal conservatives to prove who has the most endurance and resilience, we or the welfare statists.
Let us support our fellow fiscal conservatives in the legislature. Let us help them stop Taxmageddon. Then, next year, let us flood our elected offices with fiscal conservatives. When that is done, let us roll up our sleeves and build a new, stronger and more prosperous Wyoming.