CHEYENNE – Gov. Matt Mead said he expects to sign a bill into law this week that will reduce K-12 education costs in Wyoming by $27 million during the upcoming two-year budget cycle.
House Bill 140, which served as the vehicle for making further cuts to Wyoming schools, was the only outstanding piece of legislation from the Wyoming Legislature’s 2018 budget session that ended March 15. But Monday, Mead largely ended speculation that he might exercise his veto authority on the legislation when he said he will sign the bill.
“We did want to hear from people – Wyoming education folks – who had concerns about some of it and from some who are supportive, take time to look at it and make sure it’s solid (before signing HB 140),” Mead told the Wyoming Tribune Eagle Editorial Board on Monday.
The $27 million in reductions for the upcoming two-year budget cycle compounds $77 million already made in cuts to school funding in recent years. But because of what are called “escalators” in the state’s K-12 education model – or costs that increase outside of school districts’ control, specifically with regard to insurance and special education – it’s estimated Wyoming will spend around $12 million to $13 million more in the next school year than it is spending now.
Federal law prohibits states from reducing spending levels for special education, with some exceptions, such as enrollment declines, but HB 140 does attempt to put a cap on those levels. A baseline will be established for special education spending in the next school year, then the state will try to put a cap on those costs.
During Mead’s final State of the State address as governor Feb. 12, he called on lawmakers to balance responsible reductions to K-12 funding while also seriously considering new revenue sources to fund government in the long term. The Legislature’s Joint Revenue Committee, tasked with creating plans to generate hundreds of millions in new revenue in coming years, put multiple proposals forward going into the session. But none of those proposals were introduced for lawmakers’ consideration.
Mead acknowledged it was a challenging session at times when it came to K-12 funding, with significant differences between leadership in the House of Representatives and the Senate.
“There was a lot of tension between the House and Senate in terms of where to go,” Mead said.
Both chambers released their own bills reducing K-12 spending. The Senate’s called for more than $100 million in cuts, which House Speaker Steve Harshman, R-Casper, told reporters in February was just a starting point for negotiations. Senate President Eli Bebout, R-Riverton, argued his chamber’s approach reflected “reasonable, responsible” reductions.
The session not only saw a divide between the chambers in reducing K-12 funding levels, but also on a long-term philosophical difference on how to fund education going forward.
On the Senate side, Bebout wanted to cover K-12 funding shortfalls with savings while beginning a process of rolling back the state’s convoluted financial system. While Bebout showed interest in generating revenue through a lodging tax increase during the 2018 session, it would seem inevitable the size of government and K-12 funding would decrease down the road with the Senate’s approach.
The House, on the other hand, wanted to see the state rely more on investment income and savings diversions, directing those monies toward schools. Deemed the “trust our trust funds” approach by Harshman, he proclaimed in the session’s final day the House had “saved” K-12 education with the approach.
Many in the Senate would not accept the Harshman plan as tenable, deeming it “fiscal alchemy.” In the end, a deal was reached to try the House’s approach in the budget cycle’s first fiscal year beginning July 1 and the Senate’s approach the following year.
Wyoming, many lawmakers said, has an ever-growing deficit in coming years. And most economists see no new mineral boom in sight to save the state’s skin. Near the end of the session, Bebout bemoaned what he saw as kicking the can down the road on solving Wyoming’s financial problems on the Senate floor. The problem with the size of government would be waiting for the Legislature when it returns in 2019, he said.
Mead said he understands the “blanket statement” that no one in Wyoming wants new taxes. However, Mead and several lawmakers have warned that the state’s savings, which have saved the state since the economic bust that began in late 2014, won’t last long unless a solution is found to address shortfalls. It would be a mistake, he said, to wait until savings are gone to make determinations about new revenue.
“In my State of the State, I said, ‘You ought to take a look at these taxes,’” Mead said Monday. “I was somewhat disappointed they didn’t get a more complete hearing in the legislative process. … This notion you can’t have this discussion until you’re completely broke is a very bad way to go.
“Let’s say, for example, coal continues to feel the crunch, oil and gas continue to struggle, and we get to point where we don’t have a rainy-day fund or 1 percent statutory diversion isn’t going to be very helpful, then say, ‘We’re out of money and we have to raise taxes’; it’s going to lead to bad tax policy. It’s going to lead to bad tax policy because it’s done in an emergency nature and will probably overdo what we need to do.”
During the session, Mead said he favored the House’s approach to the state’s long-term financial plan. When it comes to the deal to try the House and Senate approaches for one year each, Mead said it’s probably not a long enough term to see whether the House plan is tenable. Ultimately, he said he expects the House position will prevail for a period of time. That’s in part because, Mead said, it’s difficult to explain to some in Wyoming why cuts are being made to K-12 while money is still being diverted to savings.
“I wouldn’t be surprised if there’s a move to stick with the House version for a number of years and see where it goes,” Mead said. “I understand the Senate’s position, but I think the House recognized, in a positive way, we do have a structural deficit on education, but some of the structure is of our own design.”