Municipalities face uncertain fiscal future

With the State of Wyoming facing falling revenues in the wake of low oil and natural gas prices and declining coal production, Wyoming cities and towns are trying to hold onto their current level of direct local government financing from the legislature as the 2016 budget session approaches – even if it means a two-year hiatus for the county consensus capital construction program.

Lovell town councilman Brian Dickson, president of the Wyoming Association of Municipalities board of directors, said this week that he appreciates the stance taken by Gov. Matt Mead, adding that funding is uncertain as the budget session approaches.

Gov. Mead has requested $90 million for local government funding (cities, towns and counties) for the 2016-18 biennium, which would be a 50 percent reduction from the current biennium, taking county consensus funding off the table.

Dickson said the legislature appropriated $175 million for local governments two years ago then added $8 million in supplemental funding during the 2015 general session for a two-year total of $183 million in direct distribution funding. Of that total, $105,000 was direct distribution money, and $78 million went into the county consensus program.

As the 2016 session approaches, Mead is recommending $90 million in direct distribution funding as state agencies and programs jostle for funds.

“Our governor is not willing to hang up the ‘closed for business’ sign for the State of Wyoming,” Dickson said, adding that the legislature may have to dip into the so-called rainy day accounts.

“I’m not one to say, ‘Well, we should have done this,’ but what are we going to do now?” Dickson said. “I support the concept of a rainy day fund 100 percent, but they didn’t set up any ground rules when they started it. Someday we’ll have to decide what a rainy day is. I’m content with 10 inches, but you may only want two inches.

“I hope there can be some serious discussion by the legislature on what a definition of rain is.”

Dickson said the county consensus capital construction fund is “going away,” at least for the biennium, and he said that probability generated a lot of discussion at the most recent WAM board meeting.

“The consensus of the board is that, if it goes away, we might not get it back,” he said.

WAM, he said, “strongly supports” the governor’s recommendation of $90 million but considers it as a base for local government funding, Dickson said, and is asking for $105 million in direct distribution – the current biennium total – for the next two years, as well, which WAM believes will keep cities, towns and counties whole for operational funding.

“We accept putting consensus funding on hold for this biennium, recognizing the fiscal condition of the state,” WAM stated in a position paper. “But infrastructure is a basic need of a community and we must find project monies in the future. Most communities use the consensus funds as their matching funds for grants and loans. Moreover, a downturned economy is an excellent climate for competitive pricing for infrastructure.”

Dickson explained that certain sources of funding known as “under the cap” money such as cigarette tax revenue, federal mineral royalties, severance tax, sales and use tax, gasoline and diesel tax and mineral royalty grants flow to local government statutorily, but by law, the legislature is not required to appropriate direct distribution and county consensus money, known as “over the cap” money, even though that has been the practice for many years.

“Local government financing is not a standard budget item. The state is not obligated to give us anything over the cap,” Dickson said. “The legislature has been proactive, but it’s not in the statutes. That’s why it’s always a battle.”

Legislators are all over the board on the issue as the session approaches, Dickson said, with some taking the position that the state is under no obligation to appropriate direct distribution and county consensus money during an economic downturn, while some say the governor’s recommendation is not enough.

With the supplemental funding appropriated by the legislature a year ago, the Town of Lovell received about $315,000 in direct distribution money in August of 2015 after receiving about $286,000 in the first year of the 2014-16 biennium. According to a WAM estimate, Greybull received about $251,000 in August, Basin $180,000, Cowley $120,000, Byron $112,000, Burlington $74,000, Deaver $60,000, Frannie $55,000 and Manderson $52,000 – funding totals that could be substantially reduced in the coming two years if the legislature slashes funding.

Dickson said WAM will meet with Big Horn Basin legislators Thursday in Worland, including Rep. Mike Greear of Worland, a member of the House Appropriations Committee. He said he will know more about where the legislature is heading following that meeting.

The budget session convenes on February 8 and is scheduled to wrap up no later than March 4.

By David Peck