The state of Wyoming made $395.3 million in investment income for fiscal year 2014 — about $278 million more than its budget analysts predicted.
But that doesn’t mean state government suddenly has that much more to spend. Most of the funds have already been put into permanent savings accounts that can’t be touched, or temporary ones that might as well be permanent, because what goes in never comes out.
Under statutorily established spending policy provisions, the Legislature had $127 million automatically flow into the Permanent Wyoming Mineral Trust Fund (PWMTF) on July 1, the beginning of the new fiscal year. The fund, created under a constitutional amendment passed by voters in 1974, had a massive balance of nearly $6.4 billion on July 7.
Another $15 million went right into the Permanent Wyoming Mineral Trust Fund Reserve Account. Money put into the reserve generally winds up in the corpus of the PWMTF.
Meanwhile, the controversial Legislative Stabilization Reserve Account (LSRA), the state’s so-called “rainy day fund,” was increased by $227 million. That’s on top of a balance of about $1.6 billion.
The LSRA has become a partisan issue in recent years, in part because of the account’s rapid growth since it was created in 2005. While the governor can recommend tapping the LSRA for expenditures, no money from the account has ever been appropriated by the Legislature — even during the recession that began seriously affecting Wyoming in 2008-09.
The Legislature’s Republican leadership in both houses have continued to stress the need to save more money, even as lawmakers cut funds for programs and agencies. But Democratic leaders argue that the state can afford to spend a portion of LSRA funds to keep necessary social programs operating while also improving the state’s roads and bridges — some of which are in desperate need of repair.
This is one way to look at the Legislature’s inherent conflict: The GOP wants to sock more money away so it can make more from interest and capital gains, so state government can still be funded whenever our energy-based, boom-and-bust economy goes south. Democrats want to see the state diversify its economy and invest a reasonable portion of its income in people and infrastructure, so state government doesn’t wind up spending much more later to fix problems that should be addressed now.
With Democrats in the minority in both houses for decades — only a dozen have been in the 90-member Legislature for the past two years — Republicans have had absolutely no problem keeping the state budget operating under its economic philosophy.
While earning more than $395 million during the past fiscal year in investment income is impressive, it still pales in comparison to the total funds the state of Wyoming annually receives from mineral taxes and royalties.
In 2012, the state collected $836 million in mineral severance taxes and $995.2 million in federal mineral royalties. For the same year, the state’s sales and use tax distribution was $506.3 million to the General Fund — which operates state government — and $458.2 million to local governments.
The FY2014 increase in unexpected state funds from investment income comes on the heels of $306 million above the state’s FY2013 forecast for that category by the Consensus Revenue Estimating Group (CREG). It’s comprised of state budget analysts who meet regularly to forecast how much the state is likely to receive from sales and use taxes, mineral severance taxes, federal mineral royalties and other sources of revenue.
Most of the new funds are due to capital gains from investments made through the State Treasurer’s Office and its contingent of financial managers. CREG does not make predictions about state revenue from capital gains on investments in the PWMTF, Pooled Accounts or the Common School Permanent Land Fund.
Some legislators have called on CREG to begin forecasting capital gains, but to do so would require the group to predict what will happen with each stock invested by each financial manager at least two years in advance. Given the wide range of possible variables, CREG members stress that accurate projections legislators could use would be difficult, if not impossible, to make.
CREG already faces challenges in tracking the amount of budget cuts due to federal sequestration, which has ranged from 5 percent to 15 percent and now stands at 8 percent. State officials hope these funds will be restored in FY 2015.
In many instances, CREG was close in its forecasts for FY 2014 revenues. In January it predicted sales and use taxes would generate $445.2 million through June, and the actual amount was $463.8 million. The group predicted $306.1 million for the School Foundation Program (without considering capital gains), and the actual total was $300.3 million.
Severance tax collections were higher than expected: $204.2 million compared to $189.6 million.
In addition to releasing data about its forecasts and actual state revenues at a Joint Appropriations Committee meeeting in Lander last week, the Legislative Service Office’s Budget/Fiscal Division also gave lawmakers a breakdown of the balances of a portion of the 400 separate accounts the state has. The panel asked the group to provide a list of how much money is in each of the state’s accounts.
Some of the accounts have a zero balance or a few thousand dollars, while others are huge. The Hathaway Student Scholarship Endowment Fund has grown to $533.3 million, along with $18.3 million in the fund’s reserve account.
The Workers’ Compensation Trust has about $1.6 billion; the Common School Permanent Land Fund, $2.7 billion; the Wyoming Tobacco Settlement Trust Fund, $81.6 million; the Wyoming Wildlife and Natural Trust Account, $103.9 million; and Wyoming Game & Fish Fund, $57.7 million.
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