Committee Meeting Information

June 20, 2008

Video conference

Cheyenne, Wyoming

 

Committee Members Present

Senator Jim Anderson, Co-Chairman

Representative Rodney “Pete” Anderson, Co-Chairman

Senator Cale Case

Senator Kit Jennings

Senator Jayne Mockler

Senator Tony Ross

Representative Mary Gilmore

Representative Tom Lubnau

Representative Mike Madden

Representative Mark Semlek

Representative Tim Stubson

 

Committee Members Absent

Representative Ken Esquibel

Representative David Miller

Representative Dave Zwonitzer

 

Legislative Service Office Staff

Mark Quiner, Assistant Director, Dean Temte, Legislative Analyst

Matthew Sackett, Research Analyst, Josh Anderson, Staff Attorney

 

Others Present at Meeting

The members of the Joint Appropriations Interim Committee

Call To Order

Co-Chairman Representative Anderson called the meeting to order at 9:00 am.  The following sections summarize the Committee proceedings by topic.

 

Joint Discussion of the Appropriations and Revenue Committees

The meeting was a joint meeting between the Joint Revenue Committee and the Joint Appropriations Committees.  Representative Anderson stated that the purpose of the meeting was to see if indeed there is interest to take the subject of connecting revenues and spending a bit further and if there is interest to pursue this subject and assign portions to each committee.  Representative Anderson indicated that an analysis by Dr. Paulsen shows the state has grown the budget dramatically, and suggested that the committees consider whether they want to limit the growth or not.

 

Co-chairman Senator Anderson stated that there was concern about the increase of property taxes and how much demand there would be on the revenue side.  Senator Anderson discussed the possibility of looking down the road and about the consideration of zero based budgeting.  He stated that last year's budget was a structural deficit in that the state spent more than it took in.

 

Representative Anderson suggested the possibility of limit the growth of the budget to inflation and population growth.

 

Representative Lubnau stated that it was premature to talk about limiting the budget and that it would be appropriate to look at where we are and look at some trend lines. Representative Lubnau suggested that if the committees were to gather that information, the other part of the story would become obvious.  He suggested that if the committees see where the state is now and where it might be at 3, 5 and 10 years down the road the rest will play itself out.

 

Senator Meier indicated that there is concern over the amount of spending on recurring expenses.  He also stated that there are problems with increases in salaries with regard to retirement and that it would be appropriate to have some discussion about a little discretion.

 

Senator Nicholas indicated that it may require a constitutional amendment to restrict growth and without that the committees could not restrict the ability of the members of the legislature to vote to spend dollars, other than a balanced budget.  Senator Nicholas indicated that state revenues are coming at a rate that exceeds what the state has historically spent.  He suggested that the committees could give targets for spending and provide information to the members of a level that the body should not exceed in spending.  Senator Nicholas prepared a list of topics that the committees could consider on this topic.  See Appendix 1 for a copy of the list.

 

Co-chairman Representative Anderson stated that he would like to start with a statutory change and that he would like to see the committees propose a bill to limit spending rather than a constitutional amendment.

 

Senator Mockler indicated that the state may not be caught up and that the committees need to determine if the state is caught up on highways and other infrastructure.  Senator Mockler stated that the Legislature owes it to the people to say they took care of problems when they could in case the State is in another bust before all problems are fixed.

 

Senator Nicholas stated that there is a consideration of not just making sure the state has caught up but should the state try to get ahead and take an extra step to prepare for the future.

 

Senator Mockler suggested there is a need to look at both the physical infrastructure and social infrastructure and to consider how big are the trust funds and savings accounts of the state.

 

Representative Anderson stated that there is a different inflation factor in highway building than anywhere else and that it may be appropriate to exclude highways from any spending limits.

 

Senator Meier stated that it may be necessary to take all infrastructure spending off the table when considering spending limits.  He stated that even though the state is saving, it is spending faster and the state does not want to put a structural deficit in place.  Senator Meier suggested that the committees put the operating budget on the table and look at permanent savings, inflation and population growth.

 

Representative Warren stated that it seems premature to look at the future with so much volatility.  Representative Warren stated that it was appropriate to look at each biennium but that it is hard to look 5 to 10 years into the future.  Representative Warren stated that if the committees saw data that showed where the state was spending too much it would be appropriate to take a look.

 

Representative Jorgensen stated that the state has a low taxing load and that there is currently an unbalanced tax structure.  Representative Jorgensen suggested that the committees look at taxation that they have not considered such as a statewide lodging tax.

 

Representative Madden stated that he had concerns that the spending policy is not symmetrical with the savings policy.  He suggested that the committees consider what is the appropriate amount to be saving.  Representative Madden suggested that it may be appropriate to zero base 20% of the budget every year so that the whole budget would be zero based on a five year cycle.

 

Senator Case stated that there is an unhealthy tax structure where there are high expectations without connection to cost.  Senator Case suggested that the appropriation process is not working and that the basic problem is the compounding of the basic budget because it grows each year before the legislature looks a it.

 

Senator Nicholas said that low taxes restrain government spending, but that with high revenues from mineral sector the government will grow at an unrestrained level.  He suggested that higher savings now will protect low taxes in the future.

 

Senator Case suggested that there is a disconnection between taxes and spending and that a higher savings will only exacerbate the issue.  Senator Case stated that the people are not having to pay full value for the services they receive and there is a lack of realism about what government should do.

 

Representative Lubnau stated that there is a disconnect between revenue and spending.  He suggested that the state needs to plan for a day when it does not have the mineral industry.  Representative Lubnau stated that approximately 80% of taxes come from minerals.

 

Representative Semlek noted that it would be beneficial to go back and look at the standard budget and review some of those programs.

 

Senator Nicholas stated that with zero based budgeting each agency's budget was reduced  to zero and each program within the agency was defended.  He said that each program has a constituency and that it is very hard to eliminate programs that people like.  He stated that when the issue arose previously and they were facing a decision of cutting programs or making a 5% reduction across the board, it was likely going to be an across the board cut.

 

Representative Anderson mentioned a priority based budgeting system and suggested that the proponents of the system could present information on the system to the committees.

 

Senator Nicholas mentioned a zero growth budget system where an agency could not add a program unless it got rid of a program.

 

Senator Townsend stated that it was important to consider the permanent mineral trust fund and that the state should want it to grow and beat inflation to be a viable part of the income of the state.

 

Representative Berger suggested that there is a need to do more research and that spending to get data is critical.

 

Representative Harshman suggested that there is savings issue and there is a question as to whether minerals are for today's citizens or for the future.  He noted that expenditures have grown and it is based on the compounding growth of the standard budget.  Representative Harshman said that stabilization and rainy day accounts are a good thing and could be based on six months of pay or a year’s budget or a percentage of the budget.

 

Senator Jennings noted that mineral prices are up but production may go down due to challenges in the mineral industry and that it may be appropriate to quit taking returns out of the mineral trust fund and operate the state on the other revenues.

 

Senator Nicholas noted that it would be appropriate to consider growing the corpus of the mineral trust fund so that the revenues from the fund replace minerals or to consider what is going to replace that gap if the minerals were to decrease significantly.

 

Representative Gilmore suggested that the Legislature should look at funding Medicaid at 100%, and should consider highway funding.

 

Senator Anderson mentioned the Tax Reform 2000 report and suggested that the committees should remind themselves that there is a need to diversify the economy and that it may be less diverse now than it was when the report was made.  Senator Anderson suggested that it was important to invest in young people and develop a workforce.

 

Representative Stubson stated that he would support an effort to figure out how to dig more deeply in to the standard budget.  Representative Stubson stated that the budget can be used to create efficiencies and that the legislature can motivate agencies through the budget process.

 

Senator Nicholas stated that with respect to zero based budgeting it may be possible to look at one agency or possibly a few agencies a year and that it would be necessary to involve the appropriations committee and the other standing committees.  Senator Nicholas indicated that the exercise of reviewing the budget is being done more than some people may realize.  Senator Nicholas noted that some of the biggest growth of the budget is from legislative initiative.  Senator Nicholas stated that it would be appropriate to monitor growth and perhaps set internal goals of growth limits.

 

Senator Mockler suggested the possibility of a ways and means committee where the revenue committee would look mainly at valuation policy while the ways and means committee would set the level.  Senator Mockler indicated that this would divorce the policy of revenue from the level of collection, so the Revenue committee would describe how streamlined sales tax would work, then the ways and means committee could set it at 7% or whatever is needed.  Senator Mockler indicated that currently the Revenue Committee does not know if the amount of revenue the state is collecting is appropriate or not and that a ways and means committee could connect spending with the amount of money that is needed.

 

Senator Nicholas stated that it is good for the process that there is a Revenue Committee that locks down revenue, and the Appropriations Committee is then limited by that amount.  Senator Nicholas stated that it was good to tax based on what is an appropriate amount rather than what is needed.

 

Senator Meier stated that in regard to the permanent mineral trust fund there does need to be a discussion on the disconnect in that there is currently unrestrained growth and expectation.  Senator Meier indicated that there needs to be a mechanism to control the growth, perhaps a spending policy.

 

Senator Nicholas stated that it would be possible to endow every new expenditure but that it is just another way of saying that the state is not growing the permanent mineral trust fund enough.

 

Senator Jennings stated that everything being considered has been tried in the past.  Senator Jennings suggested bringing in an outside consulting firm that can give analysis of the efficiencies within each agency and suggestions on how each agency could be streamlined.

 

Representative Lubnau mentioned the disconnect between revenues and expenditures and stated that it may just be the nature of the process.  Representative Lubnau mentioned that if the state wants to diversify its economy, people are not going to invest if the state can not predict a little bit of the future.  He suggested that it may be appropriate to bring in some efficiency experts to analyze the processes and help the government operate in a way that is accountable.

 

Senator Ross indicated that some of the problem is that the Federal government has cut back funding and that with those cuts the state has to spend more just to stay even.  Senator Ross suggested that the Legislature reacts to what is taken away.

 

Senator Anderson stated that the committees could consider the possibility of selecting a department or a number of them, and do them in a sequential way to look at zero based budgeting.

 

Representative Harshman suggested that the committees could group together, perhaps regionally, and look at zero based budgeting, growing rainy day accounts, a spending policy, growing the permanent mineral trust fund and how to restrain ongoing growth.

 

Representative Gilmore stated that it would be appropriate to consider professional consultants for zero based budgeting and to consider the possibility of a ways and means committee.

 

Representative Lubnau stated that he would like to see the committees gather data on trends within the state.

 

Representative Berger stated that it would be appropriate to standardize the budget request form so that the Committee recieves consistent information.

 

Senator Case stated that it would be appropriate to reevaluate standard budget and suggested that the state may be better served working off of a flat budget.  Senator Case stated that zero based budgeting is great in theory and that he would support a modest effort that may include bringing in consultants to zero base a couple of small agencies.  Senator Case also suggested that it would be appropriate to evaluate construction policies and that the state may be causing its own inflation problems.

 

Representative Madden stated that it would be appropriate to consider some type of saving policy and noted that a savings policy that is appropriate will lead to a spending policy that is appropriate.

 

Representative Jourgensen stated that it would be appropriate to look at issues with the experiences of other states.  Representative Jourgensen stated that it was good to take more direct hold of an issue and move more directly.

 

Senator Peterson stated that the permanent mineral trust fund needs to grow and said there is a reason that the ways and means committee went away.  Senator Peterson said that there is a need to put money towards infrastructure.

 

Representative Warren stated that it may be useful to redo or update the tax study that was done in 2000.

Senator Nicholas stated that the next action would be to prepare a list of action items then the chairs could get together to discuss the list and then present the list to Management Council.

 

Meeting Adjournment

There being no further business, Co-Chairman Senator Anderson adjourned the meeting at 11:00 am.

 

Respectfully submitted,

 

 

 

Senator Anderson, Co-Chairman                                             Representative Anderson, Co-Chairman

 

 

 

 

 

 

 

Appendix		Appendix Topic		Appendix Description		Appendix Provider
1		Topic list		Appropriations and Revenue Topic List		Senator Nicholas