Legislature eyes special session to allocate federal relief funds

CHEYENNE – What can cash-strapped Wyoming do with $1.3 billion from the federal government?

Plenty, if you ask members of the Wyoming Legislature. Yet lawmakers are hesitant to say such a windfall can solve the current budget crisis. It will take time to fully understand the restrictions on spending, they say, and could be months before the specifics are understood well enough to act on — a delay that may necessitate a special legislative session this spring or summer, according to Speaker of the House Eric Barlow, R-Gillette. 

On March 11, President Joe Biden signed a massive, $1.9 trillion dollar aid package that, according to estimates from Congress, includes $1.3 billion in aid to Wyoming to shore up everything from schools and healthcare facilities to local government and unemployment insurance.

It’s a significant injection of money that was announced as the Wyoming Legislature mulls over hundreds of millions of dollars in spending cuts due to historic declines in revenue brought on by underperformance in minerals and the COVID-19 pandemic.

And though officials are still unsure how exactly the money can be used, the Biden administration’s “American Rescue Plan” is already influencing the discussions taking place in the halls of the Capitol. On Friday, members of the House Appropriations Committee met to discuss a proposal to expend those dollars, setting the stage for an anticipated special session this spring or summer to appropriate the money.

The federal funding has also entered the minds of lawmakers tasked with funding Wyoming’s K-12 education system. The House of Representatives on Friday suspended its discussions on a bill that would make more than $68 million in additional cuts to state’s education budget, citing an anticipated $303 million ARP windfall coming to Wyoming specifically for those programs.

The one-time money may not deter voices seeking significant longer-term cuts to those programs, however. While the House of Representatives is anticipated to present the Senate with a bill that includes a conditional 1% sales tax increase to fund education, the Senate — which has to challenged the state’s current funding model — has taken a different stance. That body is standing by its proposal to cut more than $130 million from Wyoming’s schools, and members remain skeptical of using federal funds to bail out a system Senate leaders believe is fundamentally unsustainable.

“We’re still trying to figure out what the feds have done to us,” Sen. Charlie Scott, R-Casper, told reporters Friday. “We’re probably still in a position where we’re having to make some reductions this year. And it’s probably a good year to do it. Because some of those temporary federal funds may well cushion the impacts for a while.”

“We’ll make the best use of it we can,” he added. “But my guess it will be sometime in the middle of spring before we understand what the feds have really done.”

Wyoming officials have not yet ascertained exactly how much money ARP will deliver to the state and how restrictions on spending might influence those decisions, they say. 

A consultant for Gov. Mark Gordon’s office has provided the state with tentative estimates for what dollars will be earmarked for what programs. But so far, little is actually known about what strings are attached to those dollars, officials say, making it challenging for policymakers to evaluate what implications the ARP could have on the state budget. A previous relief package under the federal CARES Act did not allow those funds to be used to replace lost revenues, and lacked flexibility that some officials — like Gordon — desired to meet the state’s needs. 

“We’re in a bit of a holding pattern right now to know all the details that we will need to put the finer points on the spending proposals the governor will put out,” Renny Mackay, Gordon’s policy adviser, said in an interview. “What we’re doing now is preparing for that by putting together a group to start developing collective thinking around what this could look like for our cities, towns and counties.”

The bill’s unknowns have already caused friction with some states. Soon after its passage, Wyoming Attorney General Bridget Hill signed onto a letter with 20 other attorneys general challenging a provision in the ARP preventing states from implementing tax cuts after receiving funding. That guidance was later clarified after Ohio’s attorney general challenged the provision in court.

“There’s a lot of discussion still about the interplay of the federal money,” Mackay said. “That was one of the issues all along with the first CARES Act, which didn’t allow anything for revenue replacement. That was what the legislature has had certainty on up until this point.”

While it can certainly aid the state in the near future, officials say, the money from the ARP is not a long-term solution to Wyoming’s greater budgetary issues.

Wyoming’s budget deficit is structural, not situational, in origin, lawmakers say.  Even with a backfill from the federal government, the state still faces a reckoning on balancing its declining revenues with the level of government services it provides. 

On the second reading of the House budget bill, for example, the House rejected an amendment to defund a savings account intended for rural broadband. That came despite the governor appropriating millions of federal CARES Act dollars to support those efforts.

One time funding, the amendment’s critics argued, is no replacement for a sustainable funding source.  

“We’ve got systemic revenue issues,” Mackay said. “While there is revenue replacement allowed with the funding that’s coming, that would only be a patch. It does not do anything to help the long-term revenue issues we have. The level of spending we have, both on the executive branch side and the K-12 side, are huge discussions to have there. The long-term issue remains, and this doesn’t do anything to address that.”

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