Governor issues budget bill vetoes, urges caution about changing fiscal picture

March 12, 2020

CHEYENNE, Wyo. – Governor Mark Gordon thanked the Legislature for delivering a budget bill that crafts a sound fiscal plan, but emphasized that current events have dramatically altered the state’s fiscal outlook.

“Our world in these last four weeks has straddled an historic juncture,” Governor Gordon wrote, noting freefalling markets and record-low commodities prices. “This budget urges government to use our limited resources prudently to advance the needed services our citizens depend on. We are a proud and resourceful people and I have never doubted our resolve to navigate through this storm.”

The Governor pointed out that over the past several years, Wyoming has seen record revenues collapse. Coal bankruptcies, low commodity prices and challenges to the agricultural sector are impacting how the state funds its schools, maintains its roads, and provides critical services.

Governor Gordon thanked the Legislature for taking to heart his concerns expressed in a letter attached to the 2019 supplemental budget.

The Governor used his line-item authority on 19 sections of the budget bill, which he explained in the letter, which follows:

March 12, 2020

The Honorable Drew Perkins,

President of the Senate,

Wyoming Senate,

200 West 24th Street

Capitol Building, E201

Cheyenne, WY 82002

Dear President Perkins,

A few weeks ago Wyoming’s 65th Legislature opened the session in the newly renovated House Chamber to properly commission our Capitol into the important work of governing that can best be done here. Over the course of these past four weeks the 65th Legislature has demonstrated diligence and a tireless desire to do right for Wyoming.

Our world in these last four weeks has straddled an historic juncture. As I write, markets are in freefall and commodities across the board are at near record-low prices. I do not expect these circumstances to prevail. Ours is an optimistic country and Wyoming is a resilient state. Nevertheless, in just a few short years, Wyoming has seen record revenues collapse. This reversal is affecting the way we fund our schools, maintain our roads, and provide the critical services our citizens depend on.

Last year, a string of bankruptcies exposed the fragility of our state’s revenue structure. The contagion that brought down long-established coal companies spread to the gas sector and now has taken its toll on oil, as Russia and Saudi Arabia enter what could be a prolonged price war. Cattle prices have plummeted and farmers are barely hanging on after devastating harvests in 2019. These concerns were the backdrop for this session. Facing these challenges, together we took a sober outlook into working a budget designed to give us time to consider how and where it would be best to reduce the size of government.

I believe the bill you enrolled and delivered to me on March 9, 2020 crafts a sound fiscal plan. It is the Governor’s responsibility to moderate spending by state agencies in the middle of a year or the middle of a biennium. We will continue to be transparent in this endeavor. This budget, which we worked on carefully together, was designed to land Wyoming’s overall spending responsibly, giving our citizens time to adjust to diminished services.

As I have stated before, I do not believe across-the-board cuts will prove valuable in the task of balancing a budget. Moreover, I point out Wyoming’s revenue sources have been and continue to be concentrated in the very sectors of the economy that are most volatile. Therefore, we must anticipate that our fortunes will be subject to substantial ebbs and flows. Our savings will help us navigate through this problematic time, but choices about programs and services will need to be made to put our economy on more stable footing going forward. Wyomingites know this well, whether they are aspiring entrepreneurs or tax refugees.

This budget urges government to use our limited resources prudently to advance the needed services our citizens depend on. It also suggests investments in ways to make our industries stronger and more resilient as well as our economy more diverse and stable. We are a proud and resourceful people and I have never doubted our resolve to navigate through this storm.

I want to thank the Legislature for taking to heart my concerns from the 2019 Supplemental Session. I applaud the adoption of House Bill 002, General Government Reports creating a standalone bill for reporting requirements. And I thank you for not encroaching on my recommendation authority as outlined in the constitution.

Given your efforts to take the concerns from my 2019 message to heart, I have exercised restraint and added only a few comments to explain my reasons for the few vetoes I have put forth. Thank you for your work and for your respect. It is reciprocated with my signature of Senate File 001, Senate Enrolled Act 40 with the following line item vetoes:

Section 001 Office of the Governor Footnote 3

As this provision was a standalone bill, which did not pass, I do not believe it is appropriate to add this provision to the budget. Additionally, I share the concern of many legislators that this study would not provide a return on investment.

Section 006 Administration and Information Footnote 3

The Department of A&I has the workforce to address care for the Capitol during the session and otherwise. It takes time to bring new staff online. It has also taken some time to better learn the intricacies of a new complex. Experience and training will improve our ability to address custodial needs going forward.

Section 010 Department of Agriculture Footnote 4

This language is overly prescriptive in directing how an executive branch agency functions, and therefore raises separation of powers concerns.

Section 020 Department of Environmental Quality Footnote 2

The Department of Environmental Quality has the resources and experience to address the topic under consideration internally and in cooperation with operators already. A less expensive precursor study done in-house would be a cost efficient approach to identifying opportunities. Any succeeding private opportunity could be further analyzed and possibly partially funded by the Wyoming Business Council through their normal processes.

Section 039 Wildlife Natural Resource Trust Footnote 4

This footnote presents substantive law within the budget. It is appropriately the subject of a stand alone bill. Even so, I find it well-intentioned as a clarifying element to recognize and avoid the potential problems of artificially creating bottlenecks that can affect industry and others.

Section 045 Department of Transportation Footnote 1

This footnote presents substantive law within the budget. It is appropriately the subject of a stand-alone bill. Even so, I find it well-intentioned as a clarifying element to recognize and avoid the potential problems of artificially creating bottlenecks that can affect industry and others.

Section 045 Department of Transportation Footnote 2

I thank the Legislature for recognizing the importance of updating the revenue information system at the Department of Transportation (WYDOT). It is outdated and vulnerable. Without replacement it creates risk for all of the data on the system, and worse, failure could impact the delivery of services to the public. I am not sure anyone realizes how much we all rely on this system. Nonetheless, using the budget bill to raise revenues is problematic. This provision legislates from within the budget, and even for a project I wholeheartedly support I am impelled to exercise my veto authority. My line-item veto is intended to eliminate the problematic fee while authorizing WYDOT to move ahead using its own funds on this project until the new system is fully funded.

Section 049 Department of Family Services Footnote 4

The creation of a new fee in the budget bill is problematic. The idea of better accounting for the costs of burial or cremation for indigent people is noble, but I suggest that this should come back as a separate bill in the future.

Section 301 - Borrowing Authority - Cash Flow (d)

This subsection removes the statutory requirement that interest be paid on these loans. The purpose of charging interest on the borrowings is to ensure that the legislative stabilization reserve account remains whole and still receives the investment income on the monies that have been lent to other accounts. I see no reason to exempt these loans from being subject to the statutory requirement to make interest payments and so I have removed this subsection.

Section 302 - Borrowing Authority - Executive Programs

Subsection (b) requires that at the recommendation of the Department of A&I and with approval from the Governor and the Budget Division, the State Auditor and the State Treasurer are authorized to borrow funds necessary to meet cash flow requirements for the employee’s group insurance plan. I am striking out the words “and the budget division” as I do not think it is appropriate for an executive branch division to approve or deny the duties of elected officials.

In addition, the last sentence of subsection (b) suspends the statutory requirement that the Department of A&I pay interest on monies borrowed from the legislative stabilization reserve account. For the same reason stated above regarding Section 301, I have removed this sentence.

Finally, in subsections (a) and (c), I have removed the two requirements that I make a specific budget request as this language removes my discretionary power and recommendation authority relating to the next budget.

Section 303 (m) and 322 Hospital Study

The Department of Health completed a sound viability study last year and does not need further funding at this time.

Section 310 - Limitation on Salary Increase

This provision raises a separation of powers issue because it involves the legislative branch infringing on the executive branch’s authority. That being said I am committed to limiting salary increases and only authorizing proposals that have a proven benefit to the state, regardless of the source of funding.

Section 323- Council of State Governments Annual Meeting

This should be funded in a single bill and funding is also appropriated through Senate File 2, section 13.

Section 324 - Information Technology Funding Study

The provision to seek input only from specific vendors and not necessarily including Wyoming vendors is flawed, I hope the Legislature will seek input on the RFP from any sized vendor.

Section 325 - State Laboratories Efficiency Study

This very study was conducted a decade ago. There were several findings that resulted in recommendations that were subsequently followed for good reason. It is not inappropriate for occasional reviews to continue, however, as revenue is currently constrained I will direct our own agencies to provide recommendations of ways of making the labs more efficient as part of our on-going efficiency work. This is a no-cost option that provides a logical first step.

Section 329 - Statewide Position Eliminations

The need for further cuts is clear. I appreciate the intent of the footnote to make reductions in positions on a certain timeline a reality. It is an unenviable part of my job to make the necessary reductions to align with declines in revenue. That said, the cuts my administration makes will be targeted to the programmatic level. Across the board cuts of generally funded positions may well have outsized unanticipated consequences depending on the agency and their dependency on federal funding. These consequences could tilt agency governance away from a state-run initiative towards a more federal or “other” funded program mandate. Wyoming must actively define her programmatic needs and not be passively beholden to proffered incentives.

Section 331 - Fiscal Year 2022 Anticipated Budget Reductions

As I said in my State of the State, further spending cuts are on the horizon. That said, I take it as my responsibility to continually review state agency expenditures and implement savings on an on-going basis. I commit to updating you on our spending plans and bringing you a budget in two years that is in line with revenue. We know that the likely reduction in State revenues will require a corresponding reduction in expenses. But I believe we must be thoughtful in our decisions to reduce state spending, examining programs and services strategically instead of implementing hasty across-the-board reductions, which fail to consider any resulting ramifications. I am constrained as you are by the constitutional duty of balancing our budget.

Section 332 - Death Certification Surcharge Increase

This provision is problematic because it mandates the collection of a new fee inside the budget bill.

Section 335 - National Board Certification of Teachers

National Board Certified teachers are committed people who have spent five years working to achieve their certification and learn how best to educate our children. To change the incentive for this hard work on teachers in the middle of the program or in the years after certification is going back on a commitment. I recognize this program may run out of funding sooner as a result but Wyoming does not welch on her promises. Teachers who undertook this course of action did so with an understanding. Reductions in compensation for this program should be contemplated for new teachers entering the program not those half-way through it.

I would note there are a few items in this budget that I did not veto, but will not support in future budgets. These are subsidies to programs like “We the People,” “Ag in the Classroom,” and “Centennial Farm and Ranch” which fall outside the normal scope of state government but which the state has supported in the past. These programs have merit, but should be able to stand on their own merits. I urge others to donate to these programs, enabling them to carry on independently in the future.

Wyoming has always been a frugal state and will continue to be. There have been times of excess. They are mere memories these days. In 2016, Wyoming experienced the largest decline in income in its history, which prompted significant cuts in our state government. Wyoming citizens should know, therefore, that considerable fat has been cut away since then. Today, far fewer full-time employees are working for state government than in 2009. Concomitantly, spending on state government has slowed significantly. This biennium’s appropriation will be $270 million smaller than the last. We have made many hard choices. No doubt there are many more to come.

Thank you again for your diligence and service to our wonderful state.

Sincerely,

Governor Mark Gordon

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