“It’s a hard sell as it is,” Sen. Ray Peterson, R-Cowley, said of tax proposals that have been tossed around. “It will be an even harder sell if the schools and the education committee and recalibration committee come forward with no reductions. Because the citizens will say — I promise you — the citizens will say, ‘Then forget your tax increase.’”
Peterson gave a presentation on state education funding during a meeting in Powell earlier this month. Reps. David Northrup and Dan Laursen, both R-Powell, also spoke about the education funding shortfall.
Laursen said he thinks school districts should trim budgets “close to what the rest of state agencies cut.”
“We’ve got to get the cuts,” he said, adding he shared other legislators’ worry that taxes could increase without ever seeing reductions to education.
“We have had some cuts, so I think we need to see some revenue,” said Kimberly Condie, who serves on the Park County School District No. 1 Board of Trustees. “That’s my opinion.”
During the 2017 session, legislators trimmed around $34.5 million from K-12 education.
“We’ve still got $370 (million) to go” to address the $400 million shortfall, Peterson said.
Before the Wyoming Legislature begins its 2018 budget session in February, legislators are grappling with how to address that deficit. Peterson, who chairs the Senate Revenue Committee, said lawmakers are looking at ways to generate extra revenue or divert funding from other accounts to go toward education.
“We were told, ‘Leave no stone unturned. Look at everything,’” Peterson said.
He said the revenue committee is laying it all out on the table and also reviewing a tax study. Right now, committee members are just talking about ideas and gathering information. Ultimately, they’ll bring proposals to the Legislature next year, Peterson said.
“We’ll make our decisions and vote on it then,” he said.
Without any additional cuts to K-12 budgets, the state could generate $363 million for education through one of the following ways:
• Increase the statewide sales tax by 2.3 percent
• Add another 4 percent severance tax on all minerals
• Increase property taxes by 6 mills
Peterson said he doesn’t like the property tax increase, calling it unfair for property owners; hiking the severance tax, meanwhile, would hurt energy companies that are already struggling, he said.
“Increasing that 4 percent would be kind of killing the goose that’s laying the golden egg,” Peterson said.
A sales tax would be paid partly by tourists, and also “spreads the pain a little more evenly than the property tax.”
Peterson said lawmakers also are looking at the lodging tax or whether to do away with exemptions, such as the exemption for real estate.
“The low-hanging fruit is the cigarette tax, beer tax, the sin taxes,” Peterson said.
If the $400 million deficit was divided among Wyoming taxpayers, each would see $1,500 more in additional taxes annually, Peterson said.
“Are you ready for that, folks?” he asked. “How do I go across the street to a retired couple and say your taxes are going up $1,500?”
Peterson said he understands how difficult it is for residents on fixed incomes. He said it’s important for schools to cut their budgets where they can.
“I have complete faith in our districts around the state, that they will come forward and say, ‘Here’s an area where we can reduce our expenditures. Here’s an area where we’re going to fight tooth and nail to keep,’ and that’s understandable,” Peterson said.
He said education is a priority, noting more than half of the state budget goes toward education.
When Wyoming increased teacher salaries and made class sizes smaller, “we knew exactly what we were doing,” Peterson said.
The number and quality of applicants for open teaching positions in Wyoming has increased significantly, he said.
“The challenge is to maintain the quality of education we’ve worked so hard to get to in Wyoming — how do we do that with less money? I think it can be done. I hope it can be done,” Peterson said.
A 10 percent cut — similar to what other state agencies cut — would amount to $150 million out of K-12 education’s $1.5 billion budget, Northrup said.
Years ago, the Wyoming Supreme Court ruled in the Campbell County decisions that every student in the state would be treated equally, no matter where they lived. Before that, most funding for education came from the counties, Northrup noted.
When the Supreme Court ruled that wealth would not be a factor in a public education, Northrup said the Legislature “really upped the ante and jumped into education.”
Peterson said the state has already taken hundreds of millions of dollars out of savings or rainy day accounts to fund K-12 education.
“A lot of people out there don’t know that and they keep telling us, ‘It’s time — it’s raining,’” Peterson said. “And we’ve been tapping into that [savings].”
Rep. Northrup, who is chairman of the House Education Committee, said voters could choose to divert money from a savings account toward education.
Money from a 1.5 percent severance tax currently goes into the Permanent Wyoming Mineral Trust Fund, as required by the constitution. Through a vote every four years, Wyoming residents could choose to divert that 1.5 percent — estimated at around $127 million annually — to education instead.
By diverting that tax, it would essentially save the state from increasing sales tax by 1 percent, which is estimated to bring in roughly $150 million, Northrup said.
He likened the Permanent Wyoming Mineral Trust Fund to a coffee can that the state has filled up with money, drawing interest from the savings that the state can use wherever.
“It just keeps on filling the coffee can up,” Northrup said. “And of course, we make more interest on it — the bigger it gets, the more interest we make as we invest it.”
Before the 2017 legislative session, Northrup and fellow lawmakers proposed a five-pronged approach to address the deficit. That included cuts, new revenue and diversions.
“That comprehensive approach is clearly what it’s going to take,” said Jay Curtis, superintendent of the Powell school district. “You can’t just cut your way out of it; you can’t tax your way out of it. It’s going to take a comprehensive approach to get this done and get us through this.”
The recalibration committee is set to meet in Casper today (Tuesday), while the revenue committee will meet in August.