Committee Meeting Information

July 10th and 11th, 2007

Oil and Gas Conservation Commission, 2211 Kings Blvd

Casper, Wyoming

 

Committee Members Present

Representative Roy Cohee, Chairman

Senator John Schiffer, Vice Chairman

Senator Ken Decaria

Senator Kit Jennings

Senator Phil Nicholas

Senator Bill Vasey

Representative Rosie Berger

Representative Debbie Hammons

Representative Marty Martin

Representative Mark Semlek

 

Committee Members Absent

None

 

Legislative Service Office Staff

Dave Gruver, Assistant Director, Legal Services

Don Richards, Research Manager

 

Others Present at Meeting

Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

 

 

Executive Summary

The Select Committee on Local Government Financing met for two days in Casper.  The Committee received several background reports prepared by LSO staff and received testimony from several state agencies charged with distributing state revenues to local governments.  The Governor and State Treasurer also presented information to the Committee on funding philosophy.  The Department of Audit presented information on local government expenditure and revenue reporting.  On the second day of the meeting, several county and municipal officials addressed the Committee regarding their perceptions of current distribution methods, rising local government costs, and a summary of the services provided by municipalities and counties.

 

The Committee approved a preliminary local government funding distribution model and invited local governments to provide information on future funding distribution mechanisms and percentages, as well as comment on reporting that will provide accountability, a method to establish base funding, and a means for local government comparisons.  The Committee has tentatively scheduled its next meeting in mid-October in Cheyenne.

 

Call To Order and Opening Remarks

Representative Cohee called the meeting to order at 8:35 a.m.  The following sections summarize the Committee proceedings by topic.  Please refer to Appendix 2 to review the Committee meeting agenda.

 

Senator Schiffer moved that Representative Cohee be elected as Chairman of the Committee.  The motion passed unanimously.  Senator Vasey nominated Senator Schiffer as Vice Chairman, and the motion passed unanimously. 

 

Vice Chairman Schiffer made introductory remarks, stating that he hoped the Committee’s work would result in a rational funding system to ensure that local governments are adequately funded as the governmental entities closest to the people.  Chairman Cohee noted that the need to discuss the issue of local government funding was evidenced by the creation of the Committee.  He reviewed the Committee’s charge under the enabling legislation.  He further noted that there were a number of other entities seeking funding from the state, thus competing for a limited amount of funds.

 

Legislative Service Office Background Presentation

Don Richards, LSO, addressed the Committee.  He had previously provided the Committee with preliminary materials regarding local government funding, compiled in response to individual legislative requests.  (See Appendices 3A through 3E for a compilation of all related background reports prepared by LSO.)  

 

In summary, Mr. Richards noted the following:

 

Mr. Richards noted that Wyoming uses the U.S. Census Bureau reporting requirements for revenues and expenditures of municipalities and counties of the State.  He noted that this was done at the option of the Department of Audit.  He explained that such a reporting system has the advantage of not requiring duplicative data, but it also includes the disadvantage that the information reported may not be the information Wyoming policymakers seek.

 

Mr. Richards noted that statutes provide for different census data to be used for various distribution formulae.  Often, the decennial census is used, which is the most accurate, but is only revised every ten years.  Cities can seek an updated (special) census (which is the population used in some distribution formulae, but not all).  Mr. Richards noted that the Census Bureau also prepares an annual, estimated census for local jurisdictions.  The Committee discussed the benefits of using an updated, uniform measure of population for purposes of funding distribution.

 

Senator Nicholas asked that the chart on page 9 of the preliminary materials be expanded to include FY07.  If the information is not available, he requested that a second separate chart for appropriations be included. 

 

Senator Vasey asked for information showing the share of the State’s discretionary funding available as a percentage of the overall state budget be included in a revised draft of the report.  Senator Nicholas noted that a comparison could be to show “Type 3” funding every year for the past decade and using CREG forecasts.  Chairman Cohee asked for a description of the other entities subject to de-earmarking, comparing their revenue changes to those of local governments.

 

The Committee discussed the timing for determining categories for ad hoc revenue distributions under the budget bill allocations this past year.  Concern was expressed that Washakie County could be moved from the “hardship” category as a result of applying actual figures, rather than estimates, for the “hardship” determination.  Senator Nicholas stated that the figures for distributions should always be known before the Session begins in order to know the exact ramifications of decisions made by the Legislature. 

 

Senator Nicholas asked that Table 3, in the preliminary materials, be combined to show a biennial amount rather than a fiscal year amount.  Representative Hammons requested a breakdown of the first 11 pages to the county level.  Chairman Cohee suggested that a quadrant level could be applied instead. 

 

Senator Vasey asked for future discussion of whether county road funding should be by mileage rather than population.  Senator Nicholas noted that agencies distributing funds should report on a uniform, per capita basis so there could be a basis for comparison regardless of the distribution formula.  

 

Senator Nicholas asked for a preliminary view from staff of which revenue sources should be pooled with tables showing the amount of funding which would be involved and what the per capita distribution would be.  He also asked for a discussion of “tax equity,” i.e., the amount of tax being imposed in each county/municipality.  Mr. Richards pointed to Tables 6 and 7 and Appendix B of the preliminary materials as addressing those issues, at least preliminarily.   

 

Mr. Richards explained that the de-earmarking process did provide a mechanism for those entities whose revenue distributions were capped to seek additional funding from available discretionary funds.  Mr. Richards also addressed other materials provided to the Committee, including local government revenue sharing in neighboring states, tax exemption and rebate programs in Wyoming, statewide four percent sales and use tax collections since the food tax exemption, exploration of revenues and expenditures of selected municipal services, and a review of Wyoming’s state budget in the recent past.  (See Appendices 2B through 2E.)

 

Chairman Cohee stated that the preliminary material Mr. Richards was referencing was a result of individual legislator requests, that the materials were undergoing revisions, and that the Committee would determine when to finalize and release the materials during the following days' activities.

 

Office of State Lands and Investments

Lynne Boomgarden and Jeanie Norman, Director and Assistant Director of the Office of State Lands and Investments (OSLI), addressed the Committee and provided 4 documents (Appendices 4 through 7).  Ms. Boomgarden noted that the most dynamic program administered by the State Loan and Investment Board (SLIB) is the federal mineral royalty grant program.  Over the past two years, the Legislature has provided ad hoc appropriations to supplement the approximate $35 million statutory revenue stream made available biennially.  Ms. Boomgarden stated that while the statutes authorize a loan and grant program for the mineral royalty program and transportation enterprise program, the SLIB has only adopted rules for grants and no loans have been made under either program.  The Committee discussed the timing for distributions under the mineral grant program and the ad hoc distributions and how those distributions match up with the budget procedures for cities and counties.  Regarding the Abandoned Mine Land (AML) program, she noted that there has historically been SLIB involvement with the program, but with recent federal legislation freeing up a significant amount of money, the Department of Environmental Quality (DEQ) will be the administrator of the program grants barring changes in state legislation.  She also discussed the Transportation Enterprise program, the Joint Powers Act loans and the Clean Water State Revolving Fund program. 

 

With respect to the FMR grant program, Ms. Boomgarden noted that a needs assessment requested of local governments resulted in approximately one billion dollars in need being identified by local governments as of May of 2006, projecting two years into the future.  Ms. Boomgarden explained that the "consensus list" process adopted by the Legislature was implemented this year.  According to Ms. Boomgarden, there was concern as to whether special districts were eligible applicants, although ultimately, the SLIB included them as eligible entities.  Ms Boomgarden suggested clarifying that issue.  There was also concern for how multiple counties could participate in the process as a single applicant.  Ms. Boomgarden asserted there was not enough money allocated ($934,000) to cover significant emergency projects.  In order to get all the necessary participation in the consensus process, many local governments submitted smaller operational projects rather than the capital construction projects historically submitted for funding from the mineral grant program, according to Ms. Boomgarden.  There was also a substitution list requested of the applicants in case the major projects were not funded.  Senator Nicholas summarized two main points:  (i) that the consensus process resulted in smaller, lower priority projects being funded and (ii) that the smaller counties may not be receiving adequate funds for large projects.  Ms. Boomgarden agreed with that summary, but noted she was not advocating either for the consensus process nor the previous SLIB process but rather was attempting to point out issues the Legislature may not have considered. 

 

Senator Nicholas requested of OSLI a per capita distribution comparing prior distributions and distributions under the consensus process in each community.  Senator Vasey expressed his interest in a future discussion of the budgeting process and the timing for state distributions. 

 

Business Council

Bob Jensen, Executive Director of Wyoming Business Council (WBC), addressed the Committee regarding local government grant programs administered by the Council.  He reviewed the Business Ready Community Grant and Loan program, including the total amount of funding, the percentage of applications approved, and the types of grants made.  Mr. Jensen also briefly reviewed the Community Facilities Grant and Loan program and the Community Development grant program.  Mr. Jensen had supplied the Committee with written materials summarizing all three programs.  (See Appendix 8.)  The first two programs are administered by the WBC, with recommended projects forwarded to the SLIB for final approval.  Senator Nicholas asked Mr. Jensen to aggregate distributions under each program by county and show a per capita amount of distributions in each county.  Responding to a Committee inquiry as to job creation and retention, Mr. Jensen stated the total number of jobs created was 2,097, with 293 jobs retained. 

 

Vice Chairman Schiffer questioned whether economic diversity is being created by the State’s economic development programs.  Mr. Jensen stated that while there is a strong growth in mineral industry jobs, there has been a good gain in non-mineral industry growth in comparison with other states in the region.  The Committee discussed wage disparity between genders, and Vice Chair Schiffer noted concern on this issue based upon a recent publication of  Wyoming Trends.  Senator Nicholas requested a breakdown of expenditures in the grant programs by category, based on infrastructure, child care facilities, buildings, community centers, and like categories, as well as the anticipated expenditures in those categories for the next two years.  Senator Nicholas noted that if the Business Council is basically funding community infrastructure, those expenditures could be included in the funding of local governments instead.  Chairman Cohee asked for confirmation of the business projects that he had been provided earlier.  In reply to Committee questions, Mr. Jensen noted there had been one loan under the BRC program.

 

Department of Environmental Quality

John Corra, Director of the Department of Environmental Quality, addressed the Committee.  (He provided materials in advance of the meeting, which are attached as Appendix 9.)  Mr. Corra addressed the industrial siting process and AML funding.  Regarding the latter, Mr. Corra noted that about one-half of the funding states were to receive had been withheld by the federal government for about 25-30 years, amounting to about $515 million to be received by Wyoming beginning this fall.  The only restriction in the federal law is that priority should be based on impacted areas but otherwise may be expended at the discretion of the Legislature.  The Office of Surface Mining (OSM) would prefer to send the money to the states on a project basis, but the DEQ believes the money is to be provided in annual lump sum payments.  The State is also to receive an additional $70 million per year for 14 years from a reauthorized coal tax.  There is a commitment to the OSM to finish the abandoned coal mine land work (anticipated to be about $125 million in coal reclamation work and twice that for non-coal land mines) but there is no commitment to spend funds on non-coal lands.  Mr. Corra estimated that the DEQ could expend only approximately $30 to $40 million of the $70 million per year on abandoned mine land reclamation.  Senator Nicholas questioned whether the statutory holding account only applies to the $515 million or also to the $70 million per year, and Mr. Corra indicated he would review that issue.

 

Brian Mark, DEQ, provided a brief overview of the state revolving fund for drinking and waste water.  There are low interest loans for funding both programs. 

 

Mr. Corra also discussed the solid and hazardous waste program.  There is a grant process for landfill planning and for monitoring operations of landfills.  The final program reviewed by Mr. Corra was the voluntary remediation program.  According to Mr. Corra, currently there are approximately 90 sites applying for the remediation program.  Thus far, only $415,000 has been granted for those projects as the program is really just underway and now growing.

 

Water Development Commission

Mike Purcell, Director of the Water Development Office, provided background for the water development program.  He previously provided a written summary of the programs and a summary of funds expended under the water development program since 1977.  (See Appendices 10 and 11.)   Mr. Purcell described numerous types of programs for which funding can be obtained and his materials noted that approximately 50 percent of historical expenditures relate to municipal or domestic water use.  Mr. Purcell added that the program does not provide funding for transferring water rights from one person to another; the program does not provide for refinancing; nor does it provide funding for wastewater or flood control projects.  Distribution and treatment systems are likewise not funded under the program.  Mr. Purcell concluded by stating that water development in the various localities is very specific to local conditions and that funding of water projects is subject to different criteria than other revenue sharing. 

 

Governor Freudenthal

Governor Freudenthal addressed the Committee.  He stated the task before the Committee is difficult, the issue concerns the distribution of funds and the attempt to keep all local governments functioning and providing at least a basic level of services to its inhabitants.  The State, in his view, has taken upon itself the role of a re-distributor of mineral wealth in order to ensure all state citizens have those basic levels of services.  Governor Freudenthal stated that the pursuit of accountability should not be taken to the level of the State attempting to make decisions that should be made at the local level.  The local taxing effort requirement usually vanishes as the political will does not exist to maintain that course.  He suggested the Committee should consolidate the gains made as the funding available in the next biennium might be somewhat close to that provided this biennium.  He urged that the Business Ready Community program and Community Facility program should be adequately funded.  He stated that the consensus process worked better than expected.  Although there might be concern that the best projects were not put forward, that was for the communities to decide.  In the Governor’s view, the largest chunk of state shared revenue for locals should account for population and the relative capacity to generate revenue at the local level.  He suggested that there should also be some minimum base amount to allow local governments to maintain basic services.  He added that some portion of the state funds should flow through the State Loan and Investment Board (SLIB) with its purposes set by SLIB for hardship situations and for impact situations.  He also suggested the Legislature should review the reports and information it requests from local governments to determine whether the information reported is really needed and whether what is needed is being required. 

 

In response to Committee questions, the Governor stated that the impact is often occurring in communities with the ability to handle the impact, so the State might be moving away from as much impact distribution.  He suggested that rather than having distinguishing pots of funds, the Legislature afford SLIB flexibility in the use of funds.  The Governor noted it would be difficult to define adequate basic service funding, but the Legislature should not be too concerned with a precise calculation, as the issue of local government revenue is as much an art as a science.  He discouraged the Legislature from mandating local taxation before funds will be distributed.   If there are to be mandates on how the money to local governments is spent, he recommended basic infrastructure should be required, such as curb and gutter and other such items necessary to support housing. 

 

The Committee discussed a basic level of service for communities and expressed concern with establishing a set level in the event the economy falters.  The Governor emphasized basic public health, public safety items and to keep the formula simple in order to sustain the same level of funding in bad economic times.  Senator Nicholas suggested the formula may go well beyond basic public health and safety, and support livable and sustainable communities.  Representative Berger questioned whether the Committee should be looking at a Local Government Summit for discussion with State leaders.  The Governor stated it would be appropriate if there were a formula in place in order to avoid people taking a defensive position, i.e., each local government taking a position based upon what criteria bests helps it. 

 

State Treasurer Meyer

The Treasurer provided written materials to the Committee prior to the meeting.  (See Appendix 12.)  He noted that there are few people in government who know what the local government financing statutes provide and why.  Treasurer Meyer stated that there are a number of taxing disparities between counties and gave the example of  memorial hospitals, some of which are funded with the county 12 mills, some which are financed by special district mills.  In his view, revenue sharing formulas do not work entirely, and suggested that there must be some discretion in the SLIB or another board to survey the entire state and make a judgment call with a portion of the funding.  He questioned whether the audits of city governments should be conducted by CPAs hired by cities.  He suggested that the Committee step back and look at the different entities involved and decide anew how they should share revenues with the state. The Treasurer offered, and Chairman Cohee accepted the offer, to provide a one page memo regarding issues he has seen over the years concerning revenues to local governments. 

 

Department of Revenue

The Department of Revenue provided materials to the Committee prior to the meeting.  (See Appendix 13.)  Chairman Cohee stated that any Committee member could contact Director Schmidt with any questions.  In Director Schmidt's absence, Dan Noble, Excise Division Administrator, noted that there was an error in the materials previously provided and stated he would provide a corrected copy of the materials to the Committee.  (Having received the corrected sheet, Appendix 13 includes the revised flow chart.)

 

Department of Audit

Director Mike Geesey and Public Funds Division Administrator Pam Robinson addressed the Department of Audit’s collection of information regarding local government reporting.  The Committee was provided with an outline of the Department’s presentation.  (See Appendix 14.)  Mr. Geesey explained that the Department uses the federal census bureau’s reporting form in order to avoid duplicate reporting requirements.  The Department reports the “cost of government” and "cost of maintaining county government" annually to comply with statute.  In response to Committee questions, Mr. Geesey stated that the Department does not collect information on designated funds.  He also noted that the Department is working on programs and electronic reporting to make the information more readily retrievable.  Mr. Geesey stated that the data is not audited, but when compared with audited information it matches up very closely.  

 

In reply to Committee inquiry, Mr. Geesey stated that there is some difficulty for counties and towns to find CPAs to conduct audits.  The Department could, if directed by the Legislature, add designated funds to the reported data request.  In response to inquiries about data extraction and analysis, Mr. Geesey stated that the retention of a temporary contract position likely could facilitate the retrieval of information.  Counties can file the required report electronically and the goal is to allow municipalities to do so in the future.  Committee members questioned whether the Department believes the information being reported is accurate when local representatives have relayed that the input they provide is not necessarily uniform and reliable.  Ms. Robinson stated that central definitions are used and overall the reporting appears generally accurate, but there is no uniform accounting systems for cities in the state.  Committee members questioned why the city and town reporting requirements are not automated.  Ms. Robinson noted the underlying database was changed two years ago and the Department started with counties with the electronic transition since there were only 23.   J.R. Nunamaker, IT staff for the Department, briefly addressed the Committee and explained he was approximately four years behind in terms of workload requests.

 

Department of Transportation

Kevin Hibbard, Budget Officer with the Department of Transportation, addressed the Committee .  He reviewed funds flowing through the DOT to local governments.  (See Appendix 15.)  First, those include funds from the Transportation Commission to local entities without requirements under state or federal law (approximately $21 million in 2007).  Second were funds provided by state statute through the DOT – ($28 million in FY 07).   Last were funds provided by federal government to locals ($31 million in FY 07).  Mr. Hibbard explained that prioritization of the first set of funds is established solely by WYDOT.  Responding to Committee questions, Mr. Hibbard noted that if the first category were eliminated, the funds would be allocated based upon the normal funding of state highway funds for interstate highways.  Mr. Hibbard next reviewed motor vehicle fuel funds, a portion of  which flow to local governments outside of the Department’s budget – totaling $48 million in FY 07.  He also reviewed diesel fuel tax collections and distributions – totaling $52 million for FY 07.

 

Public Comment

Steve Gerber, registered professional engineer, HKM Engineering, commented that the state has addressed past funding crises and now must fund the crisis of local government infrastructure.  He projected that the satisfaction with the consensus list SLIB process will be short lived.  Mr. Gerber noted that the projects funded were not infrastructure and those long-term issues remain.  He did not oppose the direct distribution process, but felt that SLIB funding for larger projects is needed.  In summary, Mr. Gerber supported a reconsideration of how the SLIB funds are allocated.

 

Scott Harnsberger, Fremont County Treasurer, testified that the cost of the county’s CPA audit will be approximately $50,000 to $60,000 next year.  He suggested that with understanding and direction, the information the Legislature was seeking could be found within the current reporting requirements.  He questioned whether the reports currently being required were being used for needed purposes.  Mr. Harnsberger also provided a copy of the FY06 accounting statements for Fremont County (Appendix 16).  In response to Committee questions, Mr. Harnsberger indicated that even if the State were to change the reporting form, cities would still need to fill out the federal form.

 

The Committee adjourned at approximately 6:00 p.m. on Tuesday, July 10th.

 

Chairman Cohee called the meeting to order at 8:30 a.m. on Wednesday, July 11th.

 

County Officials

Joe Evans, Wyoming County Commissioners Association (WCCA); Kent Connelly, President of the WCCA and Lincoln County Commissioner; Jackie Gonzales, Albany County Clerk; Bob Cooke, Laramie County Budget Officer; Mark Benton, Natrona County Sheriff; and Mike Blonigan, Natrona County District Attorney and President, Wyoming County Attorney's Association addressed the Committee to explain (i) the roles and responsibilities of county officials, (ii) sources of county revenue; (iii) distribution of funds, and (iv) other areas of concern.  (See Appendix 17 for an outline of their collective presentation and Appendix 18 for a visual illustration of state shared revenue to counties.)

 

Kent Connelly stressed the need to work together in order to accomplish goals and serve the public.  He discussed the main priorities and responsibilities of most county elected officials and summarized the services generally provided at the county level.  Mr. Connelly indicated a commitment to work together to get uniform information the Committee desires.  Responding to Committee questions, Mr. Connelly stated that his county has a full-time grant writer which has been very successful in Lincoln county, but that such a position might have mixed success in other counties.

 

Jackie Gonzales briefly explained the roles and responsibilities of county clerks.  Responding to questions of the Committee, she noted in Albany County (and most other counties), the accounting systems are audited and that she can retrieve most of the data requested by the U.S. Census Bureau and Department of Audit electronically, but noted that due to differences in software, the counties may not be reporting an apples to apples comparison.  She added that the county clerks do meet regularly and she believes that the clerks could provide the Committee the information they need, if asked.  Ms. Gonzales added that she believed all counties now have a website and could post certain basic accounting data to make it available to the public.

 

Mr. Benton discussed law enforcement in unincorporated areas of the county and described the services and responsibilities of a county sheriff's office.  He expanded his discussion on the costs of healthcare at county jails.  He noted that medical expenses are probably second only to staffing in general.  With respect to staffing, Mr. Benton noted that counties are in competition with Wyoming State Highway Patrol, DCI, and municipal law enforcement.  Responding to Committee questions, Mr. Benton noted that three counties across the state (Goshen, Platte, and Natrona counties) house federal inmates.  Counties also house state inmates and have been reimbursed; however, he questioned why the State pays other states more than the counties when housing state inmates.  The Committee also discussed housing juveniles, particularly for temporary stays; homeland security funding trends; potential consolidation of services, and treatment of asset forfeitures as "unanticipated income."  Responding to Committee questions, Mr. Benton indicated that state funding for drug courts is not sufficient, in his opinion.  Mr. Benton and other county officials also discussed increased costs of courthouse security and the split responsibilities between the county and the court for such security. 

 

Mike Blonigan, addressed the Committee and noted that the Legislature has taken substantial steps in providing additional state funding.  He also stated that the duties, including growing caseloads in impacted counties, result in increased expenditures by county attorneys.  He discussed the current market based pay for county attorneys and contended that it is insufficient to pay beginning attorneys and the pay structure can also result in a drain on expertise.  Mr. Blonigan noted that his office (district attorney) does follow the state's minimum salary, but that many of his attorneys are in the X-band and some of the more senior staff are paid higher than market, though perhaps not by much.  He noted that in several counties attorneys are paid less than senior public defenders.  In response to questions of whether the State is providing an appropriate funding share for county attorney efforts,  Mr. Blonigan noted that there is wide variation among states, but he believes that Wyoming has come very close to a good balance, although some county attorneys may disagree.  With respect to the use of contract or part-time attorneys, Mr. Blonigan noted that part-time attorneys can be used as long as it does not result in ethical conflicts and the use of private firms varies widely.  Given the complexity of a case or if some conflict is present that tactic is more prevalent.  In Mr. Blonigan's impression, the use of outside counsel is growing.

 

Senator Nicholas and Mr. Blonigan discussed whether there is a need for a roving capital specialist to assist in capital cases.  Senator Nicholas noted there is a  distinction between issues of salary sufficiency and autonomy and that there are segregated funds for extraordinary charges which counties can access. 

 

Mr. Evans and Mr. Connelly jointly discussed funding needs and indicated that based upon a survey there is $300 million in unmet highway infrastructure expenses.  Responding to Committee questions, Mr. Connelly noted that Lincoln county receives little of the Highway Commission allocated funding, and that counties have to put in the money upfront and then get reimbursed.  He also noted reimbursement may not come in the quantities that are needed.  Mr. Connelly noted that there has been marginal success in obtaining financial assistance from major industry for highway construction. Mr. Connelly estimated that approximately $200 million of the $300 million in highway needs relates to industrial roads, which on a 50:50 match would result in $100 million for the state.  Mr. Evans followed up noting that the $300 million estimate includes all types of roads and, responding to a question, noted that counties have not but could bond for up to two percent of assessed value, but such bond revenue may be impractical for most counties.  Responding to Committee questions, Mr. Connelly affirmed that road and bridge costs should be a factor in any funding formula.

 

Senator Nicholas requested that counties provide the Committee with an accounting, in major groups, of how the legislatively appropriated funds have or will be expended.  Senator Decaria noted that it would be useful to look at the dollars that were generated in impact counties as a result of increased property tax collections as well.

 

Ms. Gonzales discussed the sources of revenues to counties, noting that the vast majority (80-90 percent) is generated from property taxes, sales tax, state-sharing, grants, and federal allocations.  Mr. Evans indicated that the top four counties have 60 percent of the state’s assessed valuation and suggested that most counties were not affected by the growth of assessed valuations.  Bob Cooke then discussed Laramie county general fund revenues and expenditures.  He noted that the majority of the expenditures in his county are attributed to salary and benefits.  In response to Committee questions, he noted that counties should probably do a better job of reporting restricted and dedicated funding.

 

The Committee discussed obtaining a breakout of funds for all counties in categories similar to those illustrated by Laramie county in the illustration (Appendix 17).  Senators Schiffer and Nicholas requested that the WCCA provide the Committee with a series of sample audits from a small, medium, and large county, along with their U.S. Census Bureau form 66 for comparative purposes.  Mr. Evans noted that the state's "Cost of County Government" report does more harm than good due to the differences among counties.  After discussing the differences in employee benefits packages among counties, Senator Nicholas requested an update on Niobrara county's insurance offerings and rationale for not offering employee health insurance benefits, if that is the case. 

 

Mr. Evans concluded the panel's presentation with a discussion of “over-the-cap” funding by the Legislature.  He noted appreciation for the tremendous amount of money and offered an analysis that suggested that the total amount of direct funding works out to be about three quarters of a million dollars annually per county.  He added that within about 30 days all counties were able to work together and develop priorities within the consensus process, though tight timelines and the number of eligible recipients made it difficult to divvy up that pot of funding.  Further, Mr. Evans explained, for some small towns, it probably was not enough to do a capital project.  The Committee then discussed the potential for counties to accumulate funds over multiple years for larger projects.

 

Senator Schiffer briefly discussed unsustainability of the current revenues, the need to identify likely triggers to be included in any formula, e.g., miles of road, and how to account for special districts.

 

Municipal Officials

Mark Harris, Legislative Director, Wyoming Association of Municipalities; Tom Forslund, City Manager, Casper; Bob Sieveke, Mayor, Pine Haven; Jodi Guerin, Laramie City Council; Brian Dickson, Lovell Town Council; Dave Kinskey, Sheridan Mayor; and Bret Jones, Gillette City Administrator addressed the Committee sequentially to provide multiple perspectives from a variety of municipalities.

 

Tom Forslund addressed the Committee and noted that from his experience, Wyoming views local governments as true partners.  He discussed the recent growth in Casper and cited numerous statistics on that point, e.g., 26 new subdivisions, 2,046 residential lots approved, city sales taxes increased 18.7 percent for the first ten months, etc.  He noted that the city is putting funds toward salaries, personnel, and staffing levels, and direct state mineral allocation has been used for public safety needs.  He noted that the consensus block grant allocations have worked very well in Natrona county - bulk of first year was for county court house and the second year's revenue to the five smaller communities and one special district.  Up to now, Casper has not received any block funding.  Priorities were established locally rather than by a Board in Cheyenne.

Problems with current system, according to Mr. Forslund include:

-          lack of predictability;

-          too political of a process (have to lobby during the Legislature and Interim) and compete against every other need in the state;

-          grant process has become very political; and

-          the lack of direct flows result in more complex, more burdensome budgeting;

 

Mr. Forslund recommended that local flows be based upon mineral prices which would be more predictable and less political.  He also commented that in his opinion, looking at a number on a sheet of paper regarding local finances is too simplistic.  As a comparative example, looking at the CAFR, for the last year it was issued, the State has $20 billion in cash and investments.  He admitted that Casper has a lot of money in reserves, but to really understand it, one needs to get beyond the dollar amount.  Mr. Forslund then provided an explanation of Casper’s reserves and the need to save for the future.  He urged communities not be penalized for this.

 

In response to Committee questions, Mr. Forslund suggested doing away with all of the special designations (impact, hardship, etc.) and have a pot of money with a high threshold for communities with a unique need.   He clarified his point and suggested getting rid of as many grant programs as possible and go to a block grant funding scheme, somewhat like the University's budget. 

 

The Committee then discussed training opportunities among municipalities, trust between municipalities and the Legislature, and methods to obtain accountability from both perspectives.  In response to a question of funding since de-earmarking, Mr. Forslund indicated that a lot of changes have taken place since the first de-earmarking.   He suggested that some communities see less money today than if de-earmarking had not taken place.  Specifically, he noted that Casper monitors this to see how Casper would have done and Casper is a loser under the new system.  Other communities have not been, according to Mr. Forslund.

 

The Committee discussed with Mr. Forslund the predictability of the current under-the cap flows and asked what components of a revenue distribution formula should be present.  Mr. Forslund indicated that Casper would prefer a straight population, but that some fixed costs and a pot for special assistance with a high threshold should be considered as well.  The Committee summarized Mr. Forslund's statements to be in favor of less funding for SLIB to reduce politics to which Mr. Forslund agreed, adding that the local government's priorities may be different than the State's.

 

Bob Sieveke addressed the Committee and discussed the growth of Pine Haven, noting that it is one of many communities experiencing dramatic population growth – perhaps to 503 residents, when the 2000 Census for the community was 222.  He sought a fair revenue distribution formula to meet minimum capital needs, with adequate, predictable funding to address each municipality's unique needs. 

 

Jodi Guerin thanked the Committee for undertaking the effort on local government financing.  She indicated that Laramie’s budget is 50 percent funded from the state sales tax, next in revenue generated are the optional sales tax and state direct distributions - but each city could be unique in its revenue streams and its dependence on different streams.  This uniqueness leads to a challenge to develop a uniform distribution formula.  In such a formula there should be incentives to develop proper infrastructure, which in her view a block grant can do.  The other difficulty facing Laramie, according to Ms. Guerin, is major capital construction projects.  In her view, there needs to be certainty of funding in order to undertake major projects.  Finally she noted there should be a basic expectation of services provided in all communities, with adequate funding for those basic services.

 

Brian Dickson noted that the SLIB grant/loan program has changed the amount of grants available and noted that there is no obligation by SLIB to continue funding subsequent stages of a project approved in one year.  For example, he recounted that the SLIB has approved a $4.9 million grant for Lovell, but the project is a $15 million project.  Even if the city were to save $400,000 a year it would take far too many years to save sufficient funds to construct subsequent phases.

 

Dave Kinskey addressed the Committee and discussed three principles:

 

Brett Jones addressed the Committee and indicated that in addition to his capacity with the City of Gillette, he chairs an informal working group to evaluate funding models in anticipation of potential action by the State.  He also discussed the operations of a working group of  municipalities in northeast Wyoming.  With respect to the consensus block grant funding program, Mr. Jones spoke favorably about it, suggesting he thinks it is very effective and forces discussion, though he thought there was room for improvement based upon prior testimony.  He noted that Gillette's own population estimates demonstrate an increase in excess of 20 percent between 2000 and 2006.  This growth results in significant pressures on capital and operations budgets, and recently the city has experienced a 15 percent turnover in employment, according to Mr. Jones.  He also spoke briefly about Gillette's fund balances, noting its unrestricted balance is about $23 million.

 

Responding to Committee questions, Mr. Jones clarified that the informal working group evaluating models is not a formal subdivision of WAM at this time, but they are trying to attract a broad cross-section of communities.

 

Mark Harris addressed the Committee and concluded the presentation by municipal officials.  He spoke highly of the recent efforts of the Legislature and noted the state is not dealing with a crisis, or survival situation with municipalities this biennium.  He stressed the need for a system that will allow locals to plan better and noted that municipalities want to make sure the Committee gets what they need with respect to financial reporting as the information supplied on the U.S. Census forms is very limited.  Mr. Harris also provided the Committee with a summary of recent local government revenue sharing (Appendix 19).

 

Committee Directives

Senator Nicholas initiated a discussion of a potential local government distribution model.  (See Appendix 20.)  In addition to this preliminary model, Senator Nicholas urged a discussion about local government recordkeeping and reporting which provides (1) accountability, (2) a method to establish base funding; and (3) a means to allow local governments to compare their operations.  He also suggested that the Committee should address census numbers for funding formulas to insure accuracy and consistency.

 

Various members of the Committee discussed using a group from WAM and WCCA to suggest methods of distribution under the proposal offered by Senator Nicholas.  Senator Nicholas and Representative Hammons urged that the WAM group be more democratic than the current ad hoc working group so that it is not dominated by large communities, municipalities with professional managers, or those that are not happy with impact or hardship payments.  Representative Semlek asked that any issues for which there is disagreement be appropriately explained.  Chairman Cohee suggested that the counties and municipalities work independently prior to working together.  He also indicated that any questions about such a process should first be directed to the Chair through a personal visit or a phone call and second via e-mail and that LSO staff would summarize and distribute any appropriate information generated by potential communications to the full Committee.

 

Next, the Committee turned to a discussion of what revenues would support such a funding model.  Several members suggested that the Committee look through a list of identified revenues at their next meeting in October to determine what should be included and excluded as a funding source to support a new distribution mechanism.  The Committee discussed evaluating all revenues provided to local governments by the state, except for payment for services.  The Committee also noted that the funding model being developed would not be anticipated to impact any funding considered for the '09-10 budget cycle, which would presumably be addressed through the normal budget process.

 

Senator Nicholas moved that the Committee explore and construct a new local government distribution model as summarized in his handout (Appendix 20).  The motion was seconded.  Representative Semlek raised a concern about adopting a model without local government input.  Chairman Cohee noted that this model and the intent of the motion as he understands it is to put forward a crude concept at this point.  The Committee adopted the motion.

 

Senator Nicholas moved that the Committee support a record keeping system for counties and cities that will show accountability, provide a means to identify base funding, and compare efficiencies of operations.  The motion was seconded.  The Committee discussed whether this would be an unfunded mandate on locals and Representative Semlek moved to amend the motion to request a cost analysis of such a system.  After further discussion, Representative Semlek withdrew his amendment.  The Committee noted that this motion sets the stage for fact finding and identification of what data would be useful.  Senator Schiffer noted that W.S. 9-4-507 may be revised, if the Department of Audit is not collecting worthwhile information.  The Committee adopted the motion.

 

Senator Nicholas moved that the Committee formally invite a representative group from WAM and WCCA (individually and collectively) to provide recommendations regarding percentages for distributions within the context of the proposed concept local funding model approved in motion #1.  He further moved that the Committee invite WAM and the Wyoming County Clerks Association to provide recommendations for unified, nonredundant accounting and record keeping that can be used to show accountability, provide a means to identify base funding, and compare efficiencies of operations for local governments.  Recommendations for both distribution and accounting should be prepared by the October meeting of the Select Committee.  The motion was seconded.  After discussion the motion passed.

 

After some discussion about the release of LSO background materials, Senator Nicholas moved to release the background materials prepared by LSO within the next week to ten days.  The Committee also gave LSO staff discretion to revise and update the report, as necessary, given any new information identified during Committee discussions.  The Committee also directed LSO staff to release the report under normal LSO policy but directed staff to not expend time defending or explaining the report, and include a brief disclaimer along with the reports dissemination to explain the intent of the report.  LSO staff asked to clarify whether the intent of the motion was to disregard all Committee requests for report revisions submitted during the morning of July 10th.  Senator Nicholas confirmed that intent.  The motion was seconded and it passed.

 

Chairman Cohee directed the Committee's attention to the authorizing statute of the Committee and asked the members if there were any other issues in the authorizing legislation which the Committee wished to explore or receive information.  The Committee raised no issues.

 

Future Meetings

Representative Berger moved that the next meeting of the Select Committee be approximately October 10th and 11th in Cheyenne and that the Committee be polled to determine convenient dates.  The motion was seconded and it passed.

 

Meeting Adjournment

There being no further business, Chairman Cohee adjourned the meeting at 6:10 p.m.

 

Respectfully submitted,

 

 

 

Representative Cohee, Chairman

 

 

 

 

 

 

 

 

 


Appendix

 

Appendix Topic

 

Appendix Description

 

Appendix Provider

1

 

Committee Sign-In Sheet

 

Lists meeting attendees

 

Legislative Service Office

2

 

Committee Meeting Agenda

 

Provides an outline of the topics the Committee planned to address at meeting

 

Legislative Service Office

3A

 

Committee Background

 

Primer on Local Government Financing (Edition I) [07SR001]

 

Legislative Service Office

3B

 

Committee Background

 

Local Government Revenue Sharing in Neighboring States [07IB001]

 

Legislative Service Office

3C

 

Committee Background

 

Wyoming Tax Exemptions, Relief, and Rebate Programs [07RM020]

 

Legislative Service Office

3D

 

Committee Background

 

Statewide Four Percent Sales and Use Taxes Collected [07FS004R-2]

 

Legislative Service Office

3E

 

Committee Background

 

Exploration of Revenues and Expenditures of Selected Municipal Activities, FY06 [07FS058]

 

Legislative Service Office

3F

 

Committee Background

 

An Eye on the Wyoming State Budget:  A Look Back & Short Term Projection Forward II [07IP002-2]

 

Legislative Service Office

4

 

Office of State Lands and Investments

 

Overview memo

 

Office of State Lands and Investments

5

 

Office of State Lands and Investments

 

OSLI Estimated Distributions to Cities, Towns and Counties

 

Office of State Lands and Investments

6

 

Office of State Lands and Investments

 

Map of Combined County Project Funding and Legislative Direct Distributions

 

Office of State Lands and Investments

7

 

Office of State Lands and Investments

 

SLIB Grant and Loan Programs, by County

 

Office of State Lands and Investments

8

 

Business Council

 

Business Ready Communities (BRC) Grant and Loan Program

 

Business Council

9

 

Department of Environmental Quality

 

Presentation to the Select Committee on Local Government Financing

 

Department of Environmental Quality

10

 

Wyoming Water Development Commission

 

Wyoming Water Development Program

 

Wyoming Water Development Commission

11

 

Wyoming Water Development Commission

 

Accounting of Water Development Accounts I, II, and III

 

Wyoming Water Development Commission

12

 

State Treasurer

 

Memo to the Select Committee on Local Government Financing

 

State Treasurer

13

 

Department of Revenue

 

Distribution of Taxes to Locals

 

Department of Revenue

14

 

Department of Audit

 

Local Government Reporting

 

Department of Audit

15

 

Department of Transportation

 

WYDOT Obligations to Local Government & Motor Fuel Distributions

 

Department of Transportation

16

 

Day 1 – Public Comment

 

Fremont County Accounting Statements, FY06

 

Scott Harnsberger, Fremont County Treasurer

17

 

Counties

 

County Budgeting and Finances

 

Joe Evans, Wyoming County Commissioners Association

18

 

Counties

 

State Shared Revenue Flow Chart

 

Joe Evans, Wyoming County Commissioners Association

19

 

Municipalities

 

2007-2008 Mineral and Surplus-Related Local Government Revenue Sharing

 

Mark Harris, Wyoming Association of Municipalities

20

 

Committee Directives

 

Proposed Local Government Distribution Model

 

Senator Nicholas (developed at meeting by LSO)

 

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