Amid concerns of a troubling fiscal outlook, funding for local governments took a significant hit in Gov. Matt Mead’s budget proposal released Tuesday. For Laramie, which depends heavily on state dollars for government functions, the proposal could have significant consequences.
“I do not believe that across-the-board cuts can deliver the meaningful savings or that they are prudent,” the proposal says. “If we are to reduce standard budget expenditures, we need to evaluate agency programs and eliminate those that are a lower priority.”
Local government funding proposed in the governor’s budget is cut in half, from approximately $180 million to about $90 million. Albany County is one of the poorest counties per capita in the state and relies heavily on local government funding allocated in the state budget. Unlike counties that generate a lot of property taxes tied to mineral production, Albany County’s prosperity is tied largely to the University of Wyoming. Though UW employs a large segment of the population in Laramie, the university pays no property tax.
Total appropriation for the city of Laramie 2015-2016 biennial budget is just more than $212 million. If the Legislature follows Mead’s budget recommendation, Laramie City Manager Janine Jordan said Laramie could experience a roughly 16-percent decrease in revenue to provide government services. Through the two-year biennium, this amounts to an estimated $4.8 million.
In 2014, Albany County received $1.8 million in direct aid and hardship funds from the Legislature’s appropriation, County Commission Chairman Tim Sullivan said. The appropriations made up 10 percent of the county’s budget, he said. Though Sullivan said it is too early to tell — the county also receives Payments in Lieu of Taxes (PILT), federal payments to local governments to help offset losses in property taxes due to non-taxable federal land within their boundaries — any significant cut from the state’s allocations would have a “material impact” on Albany County.
“It’s going to be a tough year,” Sullivan said. “We’re going to work with the Legislature and see if we can’t increase that funding for local governments. It’s not going to be pretty. I’m pretty sure of that.”
The state Legislature ultimately determines what amount would be distributed to cities, towns and counties, so the amount for local governments could go up or down. Sen. Chris Rothfuss, D-Laramie, said he hopes the $90 million the governor recommends survives the legislative process, because there’s a chance it could be lower. Many lawmakers in Wyoming want to cut government spending across the board, but Rothfuss said he thinks the amount for local governments could be larger.
“The idea to save at the expense of deferring projects that are immediate and necessary is just not fiscally responsible,” Rothfuss said. “We’ve been shorting cities, towns and counties for a number of years to the point where many are struggling to keep their infrastructure in good repair.”
With a “tremendous amount” of public works projects needing to be done, Rothfuss said Laramie is a perfect example of a Wyoming community that relies heavily on state funding distributions. Rothfuss said he would like to ensure distributions to cities, towns and counties are “sufficient so that it doesn’t lead to added costs in the future.”
“My approach is, and it’s always been, that you need to fund government in a constant manner and respect inflation,” Rothfuss said.
By varying what local governments can expect to see in distributions from the state budget to budget, Rothfuss said inefficiencies are created.
“Cities, towns and counties end up suffering because they can’t plan,” he said. “The Legislature is building inefficiencies in governments because of our approach to budgeting, and there’s no excuse for that.”
Though the state faces more challenges with this budget than it has in recent years, Rothfuss said legislators create an “artificial crisis and then panic and cut programs to try to pay for the shortfall that typically haven’t even been shortfalls. Everything is down, but at the same time, we’ll have sufficient revenues.”
Another contributing factor to inefficiencies in municipalities stems from inconsistencies in how much the Legislature distributes, Rothfuss said. The budget, he said, should have a target amount for municipalities for a period of five years so cities, towns and counties know how much in state funds they can will receive.
“You can’t bind future legislatures — they can change it — but if we set a precedence of stability and put in place policies that provide some confidence in what cities, towns and counties are getting next year relative to this year, things would operate much more efficiently,” Rothfuss said.
The legislative budgeting process as it exists today is not set in stone, and the state could work toward a more stable approach for funding local governments, Rothfuss said.
The problem is compounded by municipalities lacking full tax authority, which Rothfuss said leaves them without “the tools to solve their own problems.”
“The state holds all the cards in the budgeting process, and we have a responsibility to do a much better job than we do,” Rothfuss said. “We simultaneously hold back funds from cities, towns and counties and parse it out in uncertain manners and leave municipalities in a difficult situation where they can’t plan, while at the same time complaining that the (federal government) does that to us.”
A proposed $5 million cut from UW’s block grant also has Rothfuss concerned. The university, he said, suffered “too many cuts that haven’t been backfilled over time.”
“We can’t afford additional cuts while maintaining the same quality,” he said. “We’re going to feel that $5 million.”
It is difficult to say exactly which entities on campus would be most affected by the block grant cut, but Rothfuss said the benefits that should have been reaped from a recent tuition increase are lost with the cut.
“The cut wipes out that tuition increase, so everybody’s mad, but there won’t be benefits,” Rothfuss said.
Rothfuss said he respects Mead’s strategy to make small cuts to most agencies where Mead thinks it won’t be felt. But, Rothfuss said, it’s going to be felt at the university, and he does not agree with that analysis.
“The university is something I see as an investment,” Rothfuss said. “We’re not in a lean enough time to pull our investments from education, which is what the university represents.”
The good news, Jordan said, is the governor recommends distributing the $90 million in direct distribution, with zero consensus funding. Jordan said this allows local elected officials to allocate funds for services, programs and activities most needed in each respective county, where priorities “vary greatly.”
“The ability for Laramie City Council to retain local control when prioritizing budget expenditures is much greater where state funding is in the form of the direct distribution,” Jordan said.