Geringer’s tax plan looks at long term

CHEYENNE — Gov. Jim Geringer is proposing long-term solutions rather than another quick fix for Wyoming’s budget woes.

Now the big question is whether a majority of legislators will go along with him.  Legislators so far seem to agree on the need for long-term solutions, but key legislative committees are moving in different directions from the governor and considering different solutions.

The governor presented the Wyoming Legislature with two budgets for the 2001-2002 Biennium.  One was the “balanced” proposal required by law and based on currently available revenues.  The second was his recommended budget that includes tax increases and “encourages and supports continued investment in Wyoming and its people.”

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“The first budget is yet another patchwork of funding,” Geringer said.  “I cannot recommend this budget because it is not in the best, long-term interest of the people of Wyoming.”

His recommended budget relies on improved investment returns, fuel-tax increases, a change in property-tax assessment rates and a broadening of the state’s sales tax to areas currently untaxed, such as services, but no increase in the sales-tax rate and a phase-out the sales tax on food.

As expected, the governor recommended no income tax.  He has been an outspoken foe of an income tax since the idea first surfaced in Wyoming Tax Reform 2000 Committee discussions.

His preferred budget also proposes increased spending in other areas, mainly for education and corrections, and it relies of “de-earmarking” of some state revenues that have been earmarked for specific accounts.  For example, the fuel-tax increase would offset a proposed transfer of earmarked mineral royalties from highways to schools.

“I am recommending a budget that recognizes the urgent need for Wyoming to become more competitive and more successful in our businesses, in our services and in our society,” the governor said in his budget message to legislators.  “We can choose to guide the changes that face us or become the victims of their effects.”

Geringer’s challenge to the Legislature is to reject the quick fixes of the past and approve a budget and a revenue stream that is needed to meet the needs of the next biennium and beyond.

That will require tax increases, something past legislatures have been reluctant to approve, particularly in election years.  The budget waters are further murked by short-term improvement in the state’s financial picture that allows legislators to at least consider the quick fixes and short-term patchwork budgets that have enabled the state to survive the past decade.

Just a few months ago, it didn’t look like legislators would have much choice.  They were staring at a projected General Fund budget shortfall of $183 million for the coming biennium, and they spent the summer agonizing over how to close the gap.

Then, Presto!  Poof!  Just like magic, another rabbit jumped out of a hat, as rising oil prices and reserves and declining school enrollments reduced (on paper at least) that projected $183 million shortfall to just more than $17 million — if legislators spent all the reserves.

But Geringer quickly countered that the actual shortfall was still very real, particularly when legislators consider needs for increased spending just to continue providing the same level of services.  The actual deficit for the biennium, he warned, is about $140 million and will be $160 million in ensuing budget periods.

The governor’s recommended General Fund budget totals $1.35 billion for the 2001-2002 biennium, with a total budget including federal funds of more than $4 billion.

Legislative leaders have generally spoken favorably about the concept of his long-term, recommended budget, but not necessarily the details.  And when he presented it to the Legislature’s powerful Joint Appropriations Committee in December, his recommendations were met with some skepticism and even some hostility.

The Legislature’s Joint Revenue Committee, meanwhile, is recommending some of Geringer’s tax package, but not all.  And it has lunged in a different direction, by recommending a 1cent increase in the state’s general sales tax.

So stay tuned.  The Wyoming Legislature convenes its 20-day Budget Session Feb. 14 in Cheyenne.