Wyoming PBS - Capitol Outlook Week One (2016)

Feb. 12, 2016 - CHEYENNE, WY

Craig Blumenshine:        We want to welcome our viewers back to our discussion with three members of the Joint Appropriations Committee. Democrat Representative John Hastert. Senators Tony Ross and Representative Steve Harshman. Both are co-chairs of the committee. We've got a lot more to talk about. We've just seen the governor's clip about usage of the rainy day fund. Senator.

Senator Ross:        In talking about the rainy day fund I think you need to keep in perspective that last year we commissioned a study with the help of the Pew Charitable Trusts to look at what are the parameter of the rainy day fund and what's the appropriate amount? You know what they came back with? About $2.3 million. Our rainy day fund is about 1.8. When you take into consideration what they recommended, the rainy season anywhere from five-ten years, we're actually short on our rainy day fund. What we tried to do in this budget was to decide or to come up with a burn rate that would extend, let's say for ten years. If you spend $465 million right off the bat out of the LSRA your burn rate is you're done in three or four years. Our position going into was let's use it where appropriate, let's try to keep at least under ten percent burn rate so that we can get through what could be an extended period of time. From all experts that we've heard from this is not just a rainy day, it's a rainy season.

Craig Blumenshine:        The governor thought, with his budget, that this would actually grow with the way that he had planned to direct funds. Representative.

Rep. Harshman:        I think part of the- He pulled in what would be investment revenues in the future out of what's called our SIP, which is Strategic Investment Projects, which is really capitol construction, one time projects. Swept all of that away and then the one percent severance tax that we've been saving, pulled that out to pay it. Those are severance on minerals. That was his plan to pay back that usage of it. We kind of got to the same spot in many respects on some of that but I think the key was the governor said, "I've asked you what's it for, it's the largest in the country, what's it for? Nobody's told me." We left in March and we had two in-room committees working on just that. The co-chair talked about the Pew study. We have the largest in the country per the size of our budget but we don't have enough is what Pew said because we have the most volatile revenue streams in the country. That's the problem.

        They've gone through our history and showed these events where we've had these sharp drops in revenue and we're in one of those again. Again, what's it for? It's to keep up from going off the cliff and that's why we've fought so hard for last ten years for those folks who want to spend every dime every year, we've saved, saved, saved, and now it's time we're going to start drawing it down. Keep in mind we spent $200 million of it last year. Nobody talks about that. It was going into the fund, we intercepted it or at one point eight would have been two billion. We intercepted $200 million of it. People say, "Oh, it wasn't there yet." Hey, tomato, tomato, we spent $200 million out of it last year, we've got $310 million this budget profiled to spend out of it again. Trying to avoid the crunch and have a slow draw-down of this.

Craig Blumenshine:        Senator Hastert, is the committee on the right track here with the rainy day fund?

Sen. Hastert        I think the better question is what's it for and when do you use it? Sweetwater County, my local governments are telling me that they have automatic triggers for their reserve accounts that when revenue streams drop a certain amount there's automatic triggers. That was kind of the criticism they gave me is that, "Why aren't you guys setting up an automatic trigger." So that we can understand. It's just that people don't understand what- We've never really defined it as far as when we're going to use it and how we're going to use it. I understand that we are looking at defining that through legislation this year and coming. My thought was that I know the governor had dipped into it. You can argue too much, too little. I do know that he had provided mechanisms to replenish that. Whether that would have been the right way to go or it would've done the job, it would have been a 50% payback to that. I think at this point I kind of tended to agree with that and kind of looking into the future and seeing what is going to trigger this more.

Craig Blumenshine:        Senator Hastert, I want to talk to you about a discussion we had in committee. You were essentially wanting the committee to slow down with its capitol construction projects favoring people over brick and mortar if you will. Senator Harshman pushed back a little bit with you. What's your thoughts? Then Senator Harshman, we'll give you a chance to respond.

Sen. Hastert        That is exactly what I was talking about in committee. What I opened with was our initial segment with this whole thing. My priorities- We all have to do that, we have to say, "Where's our priorities?" My priorities were people and our people. The cuts to the Family Literacy, the cuts to K-12, the early childhood, I mean that, to me, that's huge. I serve, I'm a board member for the Sweetwater child developmental center, that's going to dramatically affect us. I'm saying, we make cuts to kids, we make cuts to the teachers. Doesn't matter the amount, we still made those cuts. We're not funding highways, we're not funding- We're putting 90 million into local governments. I made a motion for 105 million. You weigh that all out to put some building in. Do we need to do that now? That's just my view of- You slow down on that and you keep some of these programs.

Craig Blumenshine:        Representative Harshman, you pushed back in committee when you heard that.

Rep. Harshman:        With all due respect to Senator Hastert. I think we came in together in the House years ago. We didn't make any cuts to the child development center. We have about 80 million in this budget for Pre-K type things. Not counting all the federal grants and those things out there. It's not like- There's tough choices there are no doubt. I didn't vote for all of them but that's the way a committee works. I think talking about people- We identified vacant positions, we're trying to avoid a rift. The longer you wait on these things the fewer options you have. We tried to avoid- No rifts in this budget. You talk about the most vulnerable people in our state are at the state hospital in Evanston and at the training school in Lander. They're sitting in 60, 80, 90 year old facilities.

        We have tried to save, we've been saving the last several years to get these facilities. We know they need to be redone and modernized and the whole delivery of services. Those are important people. We're going to try to, in this budget, rebuild and re-mission. We've had a lot of people studying this, a lot of input around the state. The state hospital and the state training school in Lander, modernize those facilities that will last another 60-70 years going forward. Those are important people. There's people out here who are laying the brick and the mortar and the foundations and the electrical work and doing all of those things. Those are important people that are going to work on these jobs as well. It's all about people, that's what we do. There's some catchy coin phrases about people versus projects and athletics versus K-12. Really it doesn't any work on what the process is to really develop a budget. It's all about people, it's all people.

Craig Blumenshine:        Senator Ross, you had to balance in people, projects when you were considering the different line items that you guys went over with a fine tooth comb. How did that work in your mind?

Senator Ross:        First of all you have to look at what percentage the state of Wyoming and its spending puts into our GNP. It's a substantial amount, about 30%. We could close up all our doors and board them up and we'll just not spend anything on capitol construction and you're actually hurting the very people that we need to employ. Those construction jobs that are out there, you compound the problem if you don't have any influx of money into the economy. Particularly when people are being ripped off or they can't work in the oil fields or the railroad, they sure as heck may be able to get a construction job. That's how I look at that. We look at the state facilities, we look at some of the needs of schools. Remember, we have a placeholder for about 80 million for schools. We gave 90 million per the governors budget, his request, out of the LSRA. We are spending savings and we're using on what we think is for one time kinds of expenditures. The reality of the Legislative Stabilization Reserve Account is that it is one time dollars. It is not reoccurring. If you're going to use that for reoccurring expenses you compound the whole at some point in time. That's the way I view it.

Craig Blumenshine:        Senator Hastert, what about reoccurring expenses?

Sen. Hastert        I want to just touch on this again too. I agree and I agreed and I supported all of those projects and I think we need to do construction. Here, again, is another demonstration of we all believe we are doing what's in the best interest of the people of Wyoming we just have disagreements on how we're going to get there. Disagreements are great. Having the discussion is a great thing to do. I applaud having to do that. Then your question.

Craig Blumenshine:        Is, reoccurring expenses, that must be a concern within this legislature often funds one time projects and takes a hard look at reoccurring expenses.

Sen. Hastert        That's where I'll go. When you start working these budgets and you're working for a long period of time, you get a sense of where reoccurring funds- What are one time projects? I believe that gets real confusing out there in the public. They don't tend to generally understand what is the different pots of money. I can say some of our own members don't completely understand it and that's definitely a fact. Reoccurring expenses as far as one time. The construction projects are more one time. Some of these other projects are reoccurring. We have a tough choice and it's going to be a touch choice as the chairman noted in committee a day or so ago. People that sit in these chairs in the coming bienniums are going to be faced with some real tough choices.

Craig Blumenshine:        Want to move on to UW Athletics, it's been in the news. Senator Hastert, you seconded but did not support a motion and none of you at this table supported a motion to remove eight million dollars from this budget to support the enhanced competitive budget for the University of Armand's athletic program. It's gotten pushed back, you're all aware of it. What are your thoughts? Why did you choose? Why do you believe it's important for the university to continue that in its program?

Sen. Hastert        I think that the funding was there. I'll start by saying it's unfortunate that it got miss-characterized. That we chose Wyoming athletics over K-12 education or over some of these other projects. That's not the case at all. I think the chairman did an eloquent job of explaining how we go through the budget page by page, unit by unit, agency by agency. It's a very time intensive task. I've supported the University of Wyoming athletics and I still support the University of Wyoming. I also support K-12 education. I believe that there's going to be motions on the floor to put money back into there. You can say well now that the money's not there for K-12 I'm not going to support this anymore but I still do support the University of Wyoming. We have one four year college and my feeling is, is we need to support it. My feeling is, is that division one, you have to invest in division one to remain division one but I feel that the state of Wyoming reaps many benefits and gets repaid that many times over by the fact that we are division one.

Craig Blumenshine:        Any additional discussion?

Senator Ross:        Let me just say that this is an ongoing program. This isn't just brand new money. It's an ongoing program. It took a 20% hit from the governor. We sustain the governors budget in that regard. If you were to just remove that you are going to have to remove some of the athletic programs at the University of Wyoming. It is an experience. It is part and parcel of a university experience. To say we pitted K-12 against that or something else is simply not true. It is an important part of a university experience. If you want to compound that budget cut, which it is, it's a budget cut of 20%. You make it that much more difficult. When I looked at this I'm going, "Okay, what are we doing across the board?" That's a 20% hit, nobody's getting a 20% hit through this budget. So I looked at the issue of fairness.

Craig Blumenshine:        Is that the way to look at it, Representative Harshman?

Senator Ross:        I think so too and I think that you have got to take things in context. I think there's a lot of the general fund portion of the university dollars at GOAD athletics is about $9.8 million. With this four million that we have in the budget, the only way it can be spent is if it's matched dollar for dollar with private dollar. If you count in that four million, say it's fully matched, that takes it up to about 13.8 million. About six, over six percent of the universities generally funded budget. Keep in mind the university, if you took all the revenue that comes into the university it's over $500 million dollars a year. You're looking at an expenditure of state funds that's about two and a half percent.

        In addition to that, the state supported part of the athletics budget as less than half of their budget. The rest of it they raise. Through television, tickets, all of those other television contracts, tournaments in the NCAA itself. There's a lot to this but I think the difference is with these kids, and the reason you do it is it's great training it's part of the training of young people. That's why we do it in K-12 as well, we have all of these activities. We know it works and I think mankind has done that for years. We've done it, every civilization has done that. The issue really is, NCAA has be deregulated in regards to food and cost of attendance and those things. There's over 50 division one programs that are subsidized, state subsidies more than the University of Wyoming and seven of them are in the Mount West Conference. What we're doing is just simply staying in the division one and I think that's the question. If we want to be tier one in everything we're going to have the most outstanding engineering school in the country.

Craig Blumenshine:        What is the end-game of those that you've maybe visited with that are in support of removing this money from athletics? Is it a stealth move to move Wyoming from division one? What have you? What's the motive?

Senator Ross:        I think Senator Hastert, he commented earlier that he's heard that there are people out there that would just assume that we go down a division. I'm not really hearing that. Quite frankly, I don't think the people of the state of Wyoming want that. There is a lot of pride in the University of Wyoming. The things that we've done with the Hathaway scholarship and everything else to promote the University of Wyoming, and to have our kids go to the University of Wyoming. Our kids want to go to a school that is more than just going to class. They want to experience the whole athletic scene, they want to have a team that wins. My kids, I can only speak for my child, my son. He went to Arizona State. He went to Arizona State because he wanted to go to a big-time school that had big-time athletics. It was an easy experience.

Craig Blumenshine:        Senator Hastert?

Sen. Hastert        I want to be clear on that, and I really haven't heard that people have said that they want us to drop down a division. My comments were that I believe we need to invest in staying in division one. Now I think that those that want to cut it are believing that the JAC didn't cut enough out of the budget and that's not one of their priorities. People are drawing lines in the sand, their own lines. I can't speak to why they want to do that I just think that that's just not their priority.

Rep. Harshman:        I think both senators are right. I think also there's another piece to this. It's been portrayed like that in the media, I mean it was on the front page of the two largest newspapers in the state. Let's tell it for what it is. I haven't had one Email that said please remove the eight million. Every Email that I've had opposed to this has said, "How can you cut K-12 and add eight million?" Like these two are competing. I answered all of those with all the details. Once I did people wrote back, "Well thank you for telling me the details, I didn't realize that." These two items aren't competing. I would just say they came up on the same day in the budget as we worked budgets. This was agency 67 and that was 205 by the time we got to that. If it wasn't this four million dollars that has to be matched, it would be something else. You can find a lot of things to say, "Why are you doing that and you're reducing the increase to K-12."

Craig Blumenshine:        I want to ask a quick follow-up. It's the same question I asked Governor Mead. It's in his budget, it's in your budget, it's going to go to the floors. How do we evaluate? What's the metric that we use on whether or not this money's doing what we want it to? How do we know that it's met the level of what we want? How do you look at that in your mind?

Sen. Hastert        You can't just go by wins and losses, that's for sure.

Senator Ross:        Well, that's true.

Sen. Hastert        I think you have got to look at what this money is doing. It's supporting the health of those student athletes. Their physical demands on those athletes is a lot more than the average person, than it is for me. Their health is a long part of what we're doing. We're trying to protect the health of those student athletes.

Rep. Harshman:        I think, too. We had did the analysis on the meals, it's the same cost per meal as all of the other student meal plans. The difference I don't think that people don't realize that these kids don't go home at Thanksgiving. They're there practicing and working. They don't go home over Christmas break, they're they practicing and working. If it's spring and a spring sport they don't go home on spring break and in the summer they're all there. They're all there six weeks going to school, work, work, work, every day. They've got ten hour days every day. There's a lot to this and the health piece that Representative Hastert- That's the way the whole system operates today. Just like things in K-12 have changed from ten or twenty years ago. Things in division one athletics have changed from ten years ago and even the rest of the university. Professors operate differently, are paid differently, those kind of things.

        You'll hear parts about well we should pay our professors more. If you look over the last 14 years, I just got the data on this. Not only through our legislative appropriations but through some tuition increases. The university has averaged 3.47% faculty increases every year for the last 14 years. That's the facts. Some years have been higher, some have been zero, some have been twelve percent, some have been zero. There's a lot to this story. The good new is there's been a lot of good stuff happen in Wyoming. Our university is top flight. Our community colleges are outstanding. K-12 is one of the best in the United States. I want to apologize for what we do for our Pre-K kids. Would we like to do more? I'd love to do more for Pre-K but we're just not there yet at this point in our history.

        There's a lot of good, I think if you drive the roads of Wyoming, the roads are pretty good I mean it's pretty incredible. There's a lot of blessings to be in this state. You go to every community and they've got a new town hall or a new jail or a new courthouse or all of those kinds of things. They've got new school buildings. This big boom that we've had in Wyoming the last 15 years we've really invested in our communities and we've saved a pile of money. When I came into the legislature the perennial trust fund was at a billion. It's close to reaching eight billion now that will produce 500 million a year forever. That's going to continue to grow by the policies that we've made over this last decade or so.

        A lot of things have changed but there's a lot of good going on and I think what the governor said what I would agree whole-heartedly. We're not putting up the closed for business sign. It's not time to board up windows. Wyoming people, we've gone through this and there's some tough times, there's some tough layoffs. You look at when a drilling rig leaves, that's 300 jobs that it supports and we know that. We want to keep this state rolling and keep growing and keep moving forward and I think we've done a good job of that. Will we all agree? We're not supposed to all agree. That's part of the process, it's messy.

Craig Blumenshine:        Do we agree that the state of the state is still strong?

Senator Ross:        Oh, absolutely. When you compare us to other states and what we've done, yes.

Rep. Harshman:        Absolutely.

Craig Blumenshine:        Senator Hastert?

Sen. Hastert        Yeah, I believe that the state of the state is up there. I will just say that, yeah, overall I do.

Craig Blumenshine:        Last words and I appreciate the work that all of you have done, I watch you work. It's more work than I think the people of Wyoming understand and you always don't agree but you have a job to do and it's a pleasure for me to visit with you about the work that you've done here. It now goes to the floor. The last question I would have is what are the contingency plans if this is the tip of the iceberg? If we learn in July or October that things are worse than they are, what should the state expect? What should the people expect on how this process might play out if things are a little worse than, even as bad as they might be now.

Senator Ross:        We do have a bill that's going through the process to deal with budget shortfall if it continues. Wherein the governor will have some flexibility to make necessary cuts and come to the management council for approval. If things really got bad we would probably have to have a special session. We're trying to stave that off with this budget shortfall measure. It gives the governor a lot more flexibility with approval of the legislature. It's about a 30 day window between when the governor signals that we've got a real problem and then it's got to go to management council and then we have got to respond. We're trying to be proactive in that regard.

Rep. Harshman:        I think the governor has already in this budget, keep in mind that we learned in October that we're going to have two million less in the current fiscal year. In January that was another 50. It was 250 million less starting really in October until July 1st. The governor instituted those measures that we allow in the budget. He did hiring freezes, he stopped transfers of money to savings, kept it from going to savings and used it to meet the deficit. We also have another provision that we've had for years in the budget that if that Craig projection drops under the 150 million level it releases 150 million out of our LSRA rainy day fun into the budget to meet those shortfalls so all of those measure are in place.

        Part of this, our plan or our idea is to avoid the cliff. If you thought moving forward the penny plan, okay you've got 99 cents for every dollar this year, next year it's 98 cents, the third year it would be 97 cents. The fourth year, you know what I mean. You give people and administrators time to adjust but in that time it buys you time to have this conversation with the people of Wyoming. When I first came into legislature you were in the legislature, the tax 2000 committee. Done a tremendous amount of work, gone through all of this and then the Jonah field was discovered where deep gas and coal bed methane and then that discussion ceased. These things all go on cycles but the people will have to be involved in this deal. This is way bigger than the Appropriations Committee or the legislature. The people will sort this out and send the people to represent them on the issue.

Sen. Hastert        I think one of the first things that will continue is what I call money management. We began some of that with interrupting some of the tips into, some of the flows into permanent funds and trying to capture that. We have the ability to capture some of that statutorial tips going into permanent funds. We still have more that we could utilize if we so choose. We could capture money going into the permanent accounts. I totally agree that you've got to be careful how you do that and you've got to always balance that because we do generate interest income off of those but then by no means should we be letting the infrastructure of the state- We've gotta give, make sure that our governments closest to the people are funded to where they can do that. There's a ton of things we can look at.

        I understood that long before I ever got into the legislature that the Appropriations Committee was a ways and means committee where it was revenue, it was money in, money out. It took care of revenue and appropriations. Now we split those. I don't know if there would be some wisdom in forming that committee back up and having some discussions about that. An interesting thing that I was involved in a couple months ago, I was asked to speak with a Leadership Wyoming class of this year and we were discussing school issues and school funding issues.

        One of the things that was noted by the director was that the state of Wyoming constitutionally is supposed to fund education above all others. He was wondering and posing to the class and to the panel whether or not we should continue that. What was interesting to me was that throughout our conversation he asked that class and there were 60, I'd say 50 individuals from around the state of Wyoming, leaders in communities from around the state of Wyoming. The question was posed to them by the director, would you support a tax increase to support education? 50 hands went up in the air, so that was interesting to me to see that. Is that a pulse for the entire state? Of course not. Is that something we need to do right now? Of course not. At some point I think it's been talked about that at some point if these things continue then it puts everything on the table.

Craig Blumenshine:        Senator Ross, let me give you the last word.

Senator Ross:        Let me just tell you that I've been in legislature since 1995 so I was there when we didn't have any money. In fact, we raided every coffee can. In one year we balanced the budget on the back of an heir who died and had a substantial estate and that's what we used to balance the budget. We're in a much better position that we ever were because having gone through that and the number that have gone through that we said, "You can't do this anymore, you've got to plan for the future." So that's what we've done. When I say that we're in a better position, we are in a better position. Look what we've got. We'll be able to weather it if we're just prudent about how we do it.

Craig Blumenshine:        Three of the twelve members of the Joint Appropriations Committee, Senator Hastert, Senator Ross, Representative Harshman, thank you for joining us on Capitol Outlook.

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