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Wyoming considers spending cuts, sales tax increase for education budget hole

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Elyse Kelly | The Center Square contributor

(The Center Square) – Wyoming legislators are looking at a mixed approach to fixing the state’s $300 million structural deficit for education funding, including a potential penny sales tax increase.

The deficit comes from the decline of mineral industry revenues, according to House Education Committee Chair Jerry Paxton, R-Encampment, and House Revenue Committee Chair Steve Harshman, R-Caper, Oil City News reported.

Brian Farmer, executive director at the Wyoming School Boards Association, said the decline has been happening for a few years, but the COVID-19 health crisis exacerbated it. Also contributing is the increase in education spending, Farmer said.

“The number one driver of that has been the cost of employee healthcare,” Farmer said.

The second biggest contributor is rising special education costs, he added. Farmer said the deficit is not a result of poor foresight on the part of legislators. They have been considering this problem for at least the past five years, Farmer said.

“In December of 2016, the joint Education Committee had authored a white paper on how to address that education funding deficit, and that white paper came up with a multi-faceted approach that said we’ve got to look at things like cuts, we’ve got to look at our current revenues and whether or not they’re directed in the right places," Farmer said.

It also suggested using savings. Farmer said the state has been prudent with its rainy-day accounts.

“I think one could say it is raining in Wyoming,” he said.

Tax increases also are being considered.

Paxton and Harshman said in a news release a mixed approach including moderated spending, redirecting revenue streams and, if necessary, a penny increase to sales tax, could solve the deficit problem.

“We also have proposed a contingent increase in the sales tax – ’a penny for education,’” the release states. “This is the last resort and would only be instituted if the other three options can’t meet this challenge and our savings reach minimum balances.”

Looking at responsible spending cuts, revenue transfers and use of savings are prudent, Farmer said.

He believes there is room for spending reductions. Some of the cuts the legislature is looking at include spending on administration and activities, he said.

“I think this will be an ongoing issue for the state of Wyoming for a time, I think, as we struggle to find the right balance, the right mix of those various components,” Farmer said.

He said a penny sales tax increase will require further conversation.

“We’re bottom of the list in just about every tax category,” he said. “At some point, Wyoming has to decide what government services does it want, and what’s the appropriate revenue to provide for those services that the state wants.”