School finance tops Wyoming legislative agenda

Leading economic indicators

School finance tops Wyoming legislative agenda

Dennis E. Curran
Business Report Wyoming Bureau
CHEYENNE — Wyoming˜s Legislature will again try to create equity in school financing this year, while behind the scenes a new state committee analyzes the roots of Wyoming˜s tax structure.
The results of both efforts likely will have a profound effect on business for years to come.
First up is the Legislature, which comes to Cheyenne a week ahead of its scheduled 20-day budget session to revisit the thorny issue of education finance.
Gov. Jim Geringer called a special session to begin Feb. 9, giving legislators a full 25 working days to address a variety of education-financing reform issues along with his proposed $1.1 billion General Fund budget for the 1999-2000 biennium.
Specifically, Geringer has asked the Legislature to review and modify the funding formula adopted last year to better accommodate necessary small-schools and special-needs categories as well as to move ahead with technology and state testing and assessment proposals and the big issue of school construction, among other issues.
A recent state survey showed that school buildings basically are in good shape, but the cost of catching up on deferred maintenance and bringing them up to "as new" standards is $350 million.
Lawmakers started the school finance reform process last year in response to a 1995 Wyoming Supreme Court ruling that declared the state˜s school-funding plan unconstitutional because of a wide disparity in spending from district to district. Their efforts, by their own admission incomplete, were quickly taken to court, and the litigation continues even as they prepare to re-assemble in Cheyenne.
State District Judge Nicholas Kalokathis ruled in December that the formula adopted by the Legislature was constitutional in the main but flawed and unconstitutional in some particulars, especially for middle schools and high schools, so legislators will have their work cut out for them, again. His decision is expected to be reviewed by the Wyoming Supreme Court early this year.
Meanwhile, the Wyoming Tax Reform 2000 Committee is a few months into its charge to look at the state˜s overall tax system and recommend methods of developing a "fair, viable and economically competitive state and local tax structure capable of generating sufficient revenues to meet expected needs in the future."
The committee was created last year by legislation hailed by Geringer as potentially the most important and far-reaching of the 1997 session, and has already started its fact-finding mission by looking at a state tax system that is heavily weighted toward taxes on extractive natural resource producers, such as the coal, trona, oil and gas industries but user-friendly to individuals and many businesses.
Wyoming has a sales tax, relatively low property taxes and no personal or corporate income taxes, and committee member Shelby Gerking, a University of Wyoming economist, has already briefed his colleagues on the reality that nonmineral industries and businesses and especially individuals don˜t begin to pay enough in taxes to cover the services they receive.
On the plus side, Wyoming has socked a good proportion of its mineral-tax revenue into a Permanent Mineral Trust Fund, which now totals about $1.5 billion and last year generated more than $92 million, offsetting lack of an income tax.
In kicking off the effort last fall, Geringer reminded the 11-member committee that their committee is named "Tax Reform 2000," not "Tax Increase 2000." But given the disparities in Wyoming˜s tax structure, most observers believe the committee˜s recommendations will have to include a tax increase for somebody, even if the bottom line is revenue-neutral. The committee is scheduled to report by July 1, 1999.
With all the attention on school finances and tax structure, Geringer˜s proposed budget has generated few waves.
One of the keys in the budget proposal is an additional $166 million over two years for school financing, an amount that could change as the Legislature continues its school-financing reforms.
While the total all-funds budget is $3.8 billion for the biennium, most legislative activity will focus on Geringer˜s proposed General Fund Budget as the state˜s main bank account that pays for the operation of most state agencies. That proposal is for $1.1 billion in state spending, with an $18.7 million surplus.
"With these recommendations for new and reallocated funding, all current state statutory obligations can be met for the next biennium with no added statutory revenue increases," Geringer said in his budget message to legislators. "If additional funds were to be needed, I recommend a further review of other residual amounts in various funds that could be used for program additions."
In other words, don˜t look for any new taxes in 1998 (coincidentally an election year), but stay tuned for the Tax Reform 2000 Committee˜s report in 1999.

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