Last week’s votes in the House of Representatives and the U.S. Senate placed Wyoming’s $675 million per year of federal mineral royalty (FMR) payments to the state of Wyoming in jeopardy. Four states — Wyoming, Alaska, New Mexico and Montana — could now face the loss of $1.3 billion dollars in lost FMRs.
Since neither the House nor the Senate plan has enough money to pay for itself, the tax cut would go into sequestration, which requires all federal agencies to have budget cuts across the board. This act includes reducing federal payments for oil, natural gas and coal to mineral-rich states like Wyoming with lots of federal land.
Our national delegation is insisting that this would not happen, but fear is running high in Cheyenne and State Treasurer Mark Gordon has expressed his concern about this possibility and how it would hit Wyoming’s schools the hardest.
The Congressional act that would start the cuts is called the Pay-As-You-Go Act. Inside the beltway of Washington, they call this PAYGO. It requires cuts to federal agencies equally across the board if legislation passed by Congress increases the federal deficit.
The $1.5 trillion-dollar tax cut is going to increase the national debt from $20 trillion dollars to $21.5 trillion dollars. This will trigger the PAYGO requirement to reduce Wyoming’s total payment of FMR’s. The Office of Management and Budget determines the amount of the FMR cuts. Congress could possibly vote to waive the PAYGO cuts to FMR’s but it would take a vote of 60 percent or more in favor of it in both houses of Congress.
Wyoming relies a great deal on our FMRs and the national delegation in Washington claims that there has yet to be a sequester under PAYGO because lawmakers have voted many times to waive the required cuts.
But Congress has cut by sequestration FMRs and coal lease bonus funds in our state by 6.9 percent in fiscal year 2017. So, when the national delegation claims this won’t happen and that they can get a positive vote for the waiver of PAYGO whenever they want, some facts point to a different result.
Wyoming’s FMR’s have already been cut and that is affecting the state budget and how the Joint Appropriations Committee deals with the budget crisis in our state in the biennium. This year’s CREG report claims that predicting future revenue streams for FMRs is so volatile that CREG is hesitant to forecast the amount due to the possibility of the Trump tax cut and sequestration.
Furthermore, the congressional delegation from New Mexico offered an amendment to exempt FMRs from the tax cut bill — and it failed.
Wyoming is rich in minerals and about 50 percent of our state is owned by the federal government, so we receive the largest payment of FMRs in the country — about $675 million dollars. Eleven other states receive much smaller payments from federal mineral royalties — not enough to carry the vote in Congress. Eleven states aren’t going to add up to 60 percent in both houses of Congress.
Wyoming is experiencing a serious deficit within the school foundation fund and the possible loss of federal mineral royalties could grow our current state deficit to an insurmountable amount of money, with a devastating impact to Wyoming’s schools. Wyoming is facing a deficit of more than $800 million when the governor’s exception requests are added to the shortfall left after the last legislative session, losing another $675 million would push the state to a deficit of $1.4 billion.
This is after the Appropriations Committee and the Governor cut 1,100 state jobs and $410 million from the 2017-18 budget. More cuts to education and services would be the result, along with higher taxes to the citizens of Wyoming.
The Trump tax cut is not worth the $675 million dollars that it could cost our state.
Jeff Wasserburger is a state senator and represents Campbell and Converse Counties.