Tuesday, February 6, 2018

Taylor Haynes and the Federal Government

Before we continue the series on austerity, I need to make a comment on something that Taylor Haynes said regarding our relationship to the federal government. I believe that Haynes, whom I know, appreciate and respect, is painting with rosy colors regarding the benefits of our state government taking over federal land and thus getting 100 percent of the mineral royalties. 

Here is what Haynes wrote on Facebook on Monday, February 5:
I want to clarify what I mean, and what our legislature is considering, when we discuss a Constitutional relationship with the federal government regarding our lands. Almost 70% of our mineral wealth is on lands that the federal government currently manages. In turn, we give them 51% of the mineral royalties and we keep the remainder. What I want for the people of Wyoming is for us to manage those lands and keep 100% of the mineral royalties. If this was done in 2014, 2015, and 2016 we would have an extra $2.64 billion in our state budget. That easily covers the biennial budget shortfall that our legislature is facing now, and it allows for our state to invest in the future. My vision for that future is to re-tool our education system to allow for vocational and university tracks that creates work-force ready students. Managing these lands would cover the cost of that and much more.
I am not going to question Haynes's arithmetic, which appears to be correct. The problem is, instead, that if Haynes ever gets his hands on federal lands, he should expect that the federal government will return the favor by terminating all federal aid to Wyoming. 

In the years Haynes mentions, Wyoming received a total of $3.74 billion from the federal government. This is genuine federal funds; when the federal government does the tally, they include severance taxes. That is of course an incorrect calculation, as those funds belong to Wyoming in the first place; they are only administered by the federal government. 

Alas, the correct number for federal aid to states in 2014, 2015 and 2016 is, in total, $3.74 billion. These funds go toward Medicaid, WYDOT, K-12 education, and welfare programs. By reclaiming the federal lands to get his hands on all the mineral royalties, Haynes would, by his own numbers, have ended up deepening the hole in the state budget by almost $400 million per year, on average. 

Haynes is one of the two best candidates for governor (together with Hageman) in the race so far. I am sure he has considered what reactions his land idea would get from the federal government. However, since I have not yet heard how he would handle a loss of federal funds, I do have a suggestion. 

I have developed a plan for a fiscally downsized state government, a plan that would allow us to get out of federal funds in both Medicaid and K-12 education. If we also add tolls on I-80 and some reasonable reforms to welfare, we could completely cut the fiscal ties to Washington. The reforms to Medicaid would consist of vouchers, interstate purchases of health plans, and deregulation of health care in Wyoming. Taken together, these reforms would bring us close to cutting the federal government out of Medicaid in our state. 

In K-12, we would need a Wisconsin-style voucher system and a deregulated school system, opening for private schools, charter schools and home-schooling circles to compete for students. Here, the potential cost reductions substantially exceed any loss of federal funds. 

Is Taylor Haynes willing to get behind these reforms? If so, he will not only prepare for the consequences of his land deal, but he will also give the Wyoming economy a growth boost - and make the state government substantially more affordable to taxpayers. 

If, on the other hand, his answer is "no", his ambition to reclaim federal lands could very well open a Pandora's Box of fiscal problems the size of which we have yet to experience in our state.

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