Wyoming House Advances Legislation to Address Education Deficit
CHEYENNE, Wyo. (Release) - The Wyoming House of Representatives advanced legislation on Tuesday that takes a full-picture approach to solving the state’s K-12 Education funding deficit. House Bill 173 would leverage spending reductions, revenue diversions, federal stimulus funding and a potential half-percent sales tax for education, triggered if state reserves were to fall below a critical level, to close structural revenue shortfalls.
The Wyoming Constitution requires the Legislature to fund an equitable education “adequate to the proper instruction of all youth in the state.” Declining energy production and prices, which have also caused property taxes to fall, have reduced state and school districts’ education revenues. Without legislative action, Wyoming’s schools will require an annual $331 million transfer from the Legislative Stabilization Reserve Account (LSRA), the state’s “rainy day” fund, to maintain operations.
“House Bill 173 addresses the education deficit from every angle. This creates a multi-pronged solution, because we cannot close the systemic funding problem by cuts or taxes alone,” said Speaker of the House Eric Barlow (R-HD3).
“The bill was thoroughly debated and amended to meet our education system’s needs. It was passed by the House with bipartisan support and an overwhelming majority, because it puts good policy ahead of politics,” said Majority Floor Leader Albert Sommers (R-HD20).
HB 173 would reduce spending by providing health benefits only to those enrolled. The current model requires the state to pay block funding based on a calculated number of educators and administrators, even though there are fewer employees than the model projects and about a quarter do not opt-in to benefits. The reduction, which would be phased in over three years, will reduce K-12 funding by more than $80.5 million cumulatively over the first three years.
The bill would also redirect revenue from existing sources, including severance taxes and investment income from state savings. This use of existing revenue streams will provide up to $70 million annually.
The American Rescue Plan, which was approved by Congress this month, provides significant funding to the state. HB 173 would allocate up to $243 million of the ARP funding to K-12 Education over the next three years, reducing the use of savings in the near term and providing time for the state’s new and historic revenue drivers to close the gap.
However, the State must be careful not to reduce funding to education in a manner that jeopardizes these federal funds. Wyoming must comply with a maintenance of effort or lose the funding.
Finally, HB 173 includes a half-penny sales tax that would be directed solely to our schools, which would be triggered only if the rainy day fund is drawn down to a $650 million balance. The sales tax, which was amended down from a full percent, provides an “insurance policy” that the state will be able to appropriately fund education in the event that the rainy day fund approaches its statutory minimum balance ($500 million), at which time it would no longer be able to backfill revenue shortfalls.
“The potential sales tax increase is a necessary measure to ensure that if our revenues do not improve, we will still be able to provide a high-quality education to our young people. It applies only if income from existing revenue streams does not improve enough to close the gap,” said House Revenue Committee Chairman Steve Harshman (R-HD37). “Wyoming has the third-lowest sales tax in the country. No one wants to raise those unnecessarily. This option would only be implemented if necessary to provide one of the most critical services, education. I think all Wyomingites generally agree that our kids and our schools are worth half a penny.”
HB 173 was passed by the Wyoming House of Representatives, 41-19. Thirty-eight amendments were proposed, including 23 in the third reading. It will now proceed to the Senate for consideration.
“This bill has been meticulously vetted and fine-tuned to ensure it creates a sustainable solution to fund our schools,” said Representative Evan Simpson (R-HD21). “These are difficult decisions, but it is the right policy to ensure we can provide a good education for future generations. We look forward to working with our colleagues in the Senate to get this bill past the finish line.”
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