- It is back to school time for the Wyoming legislature as senators and representatives gather at the state capitol in Cheyenne for the biennial budget session.

Hundreds of millions of dollars are at stake and the two top leaders of the legislature say major developments have already taken place in the opening days.

I'm Steve Peck of Wyoming PBS.

Join us now for "Capitol Outlook."

This program is supported in part by a grant from the BNSF Railway Foundation dedicated to improving the general welfare and quality of life in communities throughout the BNSF railway service area.

Proud to support Wyoming, PBS and by the members of Wyoming PBS.

Thank you for your support.

I'm very pleased this morning to be joined by the two primary leaders of the Wyoming legislature, speaker of the House Albert Sommers of Sublette County, Senate President Ogden Driskill of the northeast corner of Wyoming, the Devil's Tower area.

Welcome to you both.

We're here at the start of the biennial budget session.

The budget session is sort of mandated by law.

Every couple of years, you have to come in here, have to do that.

- Yeah, the budget session is mandated.

We're required by the constitution to produce a balanced budget every two years.

- Balanced budget, that's an important element.

- A balanced budget.

It's constitutional and we do that.

Our appropriation committees have worked hard to produce a budget, as has the governor.

So the governor produces a budget first, and then we work that budget as the legislature and then ultimately the bodies bring into that budget process what they view as important.

- Senator, how important is the governor's budget message?

We heard him talking about that yesterday during the State of the State.

Is that viewed as a guideline for lawmakers, a bible, a blueprint, or just an advisory thing?

How do you view that?

- So there's two, The real heart of what he does, and the governor's been a phenomenal good at what he does, is he actually, his team writes the budget itself prior to giving it to our appropriations committees and been pretty tough.

So his budgets tend to come to us pretty clean and they work their way through them.

And, you know, last year as an example, you know, we put 1.4 billion in savings first time.

And that's one of the really hard things we're at, is the attitude out there is that we're broke and we're really having a hard time financially.

And the fact of it is, is we're not rolling in money, but we're certainly not broke in Wyoming and we're stabilized to the point through good fiscal leadership that we actually can fund some of the stuff that we've not taken care of through some of the leaner years.

And I think we're really in a good place.

And our committees have delivered what I think is a very, very good budget.

- It's sort of been a while, hasn't it, since we've had what you might consider to be a normal kind of budget process because of variations in the needle swinging back and forth as to how much revenue we're going to have or predicted to have, the COVID crisis, then the influx of all the federal money?

Are you sort of feeling we're back to more or less normal this year in terms of least of the process?

we're really based upon mineral production and are a natural resource-based economy and those prices of commodities fluctuate, and as they fluctuate, so do our revenue streams.

What has been really important is that we have saved a lot of money, like last year, in good times that allows us to get investment income off of those savings, bring back into our budget to be a stabilizing factor.

The stabilizing factors in our revenue streams are sales tax, which are kind of constant.

You have to buy things.

And the public comes into Wyoming, by the way, sales tax, there's a fairly large percentage that's paid by out of staters.

And then the other revenue stream is income off our investments, which amounts to 25 to 30% of the revenue stream into Wyoming.

Solid, steady revenue.

part of what we saved last year went into what's called reserve accounts.

We're trying to get the public to understand these reserve accounts are, once again, they're built as a buffer.

They're not constitutionally protected as our permanent mineral funds.

Permanent mineral funds, even if we get in the worst of times, we can only spend the interest off of them.

So they protect themselves.

The only thing they're not protected from These reserve accounts are outside and what they're set up to do is that fluctuation that the speaker talked about is when we take this 15, 20% fluctuation, what has happened in the past, and I'm gonna go back into the not-so-far past, is when Speaker Sommers and I were on appropriations together, we were faced with a $1 billion shortfall.

And we were both sitting there looking at each other and, you know, in truth, he and I have both been beat up a little bit about how conservative we are.

I can probably tell you the two of us through those years cut $400 million out of the budget.

It's the biggest budget cut that had ever been made at the time.

- Not something you did with pleasure, I'm sure, but.

- It's hard.

- It's hard.

- And that's where we're at now is we've got this yin and yang push that's going on.

And when you make those hard cuts, nearly all our big state budgets are based around personnel of some kind.

It's school teachers, snowplow drivers, health professionals.

When you cut budgets, it means, and you can fill in the wife, brother, cousin, friend, they lose their jobs.

It's not we're just were lean and tight.

You took their job away from them.

And I've really tried to encourage my body to think about the consequences.

When you're broke, you have no choice.

You do that.

But when you're on a stable funding plane we are now, it's time to talk about how we stabilize it even further.

And the other leg of our economy that actually is starting to provide a very significant portion is the tourism industry.

and all of a sudden now, they're generating, you know, our third leg is Teton County in truth and they're generating a significant part of our income.

And the fun part is it's all outside money.

As Speaker Sommer said, this is money that comes from 49 other states and they're paying it and we don't have to pay it.

- Well, you mentioned the boom and bust cycle.

My impression is we're not quite in either one of those states now.

How would you assess the state's fiscal profile now is there was a little period of time where on the West Coast, natural gas went really high.

My side of the state sells natural gas into the Opal Hub.

It goes west.

And we captured, we, the state of Wyoming, captured some significant revenues during a period of time there that still is bleeding into this budget because of the amount of the price of natural gas, frankly, You know, the question always is what's next?

And our fiscal team, they provide us long-term profiles to look out to the next biennium and the next biennium.

Now they're just, you know, they're just guesses, but they're the best guesses we have.

And that'll kind of tell you the future.

And the future doesn't look bad.

But it depends upon our policies as well and what policies we have, what policies the federal government has as it relates to our minerals industries.

And so time will tell, but we're not in a bad way right now.

- There's one other piece that we really didn't address that everyone in the state it's probably the one they want to hear about the worst and that's property taxes.

You know, interestingly enough, the legislature doesn't look at them quite the same.

They really don't come back to the legislature.

The property taxes are all- - Much more local.

- They go into the local.

They fund your, you know, your local fire department, your county commissioners, spraying weeds, county fairs.

It's your ambulances and all the things that provide service to you.

And it provides that.

And the second leg of it is about 70% of that money goes back to education in some form, be it community college, but mainly K-12.

And because of court decisions, we're mandated, that money, if we take it away in some fashion, has to be backfilled and that means it will come right back out of the money that we're spending on a state level.

So it has big impacts.

And interestingly enough, I have been getting kind of beat up on some of it obviously and the truth is it's a fairly new phenomenon.

These property taxes really have only skyrocketed in the last four- - Get into that just a little bit for us.

What has changed and why?

- COVID.

So COVID hit and Wyoming, when you look from the outside, it was a wonderful place.

Open space, you weren't crowded with people, and people woke up because they had to go home and sit in their house and part of them realized, hey, we can do this from somewhere else.

And so part of them had either been here hunting And so part of them had either been here hunting or been here as a tourist and they said, "My god, this is the place we'd love to go."

So you leave another state and you can fill in the blank and your house is worth, let's say, a million dollars.

It will buy three houses in Casper, two houses in Cheyenne.

- And a lot of people did that.

- And they did it and they came.

And when you do that, the perception is that we raised property taxes.

And the answer is we did not.

They've stayed exactly the same.

What has happened is the valuation has changed.

Our taxes are based on the value of the property.

So a house in Cheyenne, and I know Cheyenne 'cause I've lived here since session, when we started coming down here, these townhouses up north were selling for, you know, 180 to $200,000.

Those are now north of 600,000, the same ones now.

- And that means that the person next door, suddenly that person's valuation- - Rises.

- Goes up as well.

It's just the way- - They do, and so when that happens, if your valuation doubles, your property tax doubled.

And of course, for some, you know, and by the way, if you're a lower income, it hits you 'cause you're lower income, but it's not near as much.

The example I use, you know, my house is around a $300,000 house.

My taxes have gone up 700, $800.

I would expect with what's happening in my county, my house taxes will triple in the next two years.

Houses are starting selling lots near me.

I can afford 700.

You know, when you start, and when you go to Teton County and you get into, we all think about billionaires.

So a guy that's got a $30 million house, you know, it's astronomical what's happened to him.

But what about the poor person that lives a block off of downtown and they bought their house in 1956?

And now they're in a house, that I happen to know a legislator very well has one of those and his taxes have gone, I believe, from, you know, 7, 8, $9,000 a year, still very high, to over 20 now.

And so the legislature's gonna deal with those and it's gonna be one of the most difficult issues we do.

It's 100% recognized by both sides, by every member.

We didn't get anything out last year.

The second half- - Other than the refund program - Refund.

And it worked.

It helped a lot.

- It did help a lot of people.

- But it's very difficult 'cause many of the options take more than one year to fix.

So that's why you're seeing the cap taxes is the caps are much easier for them to implement.

If we said, "Look, you just cap it at 5%," they can do that quite rapidly.

- When you say cap it at 5%, meaning it couldn't rise more than 5%.

- Right, and I'll explain that 'cause there's some problems out there.

Everyone says, "Oh, no, it's an automatic five."

No, it says if your taxes go up 20%, they can take only 3% or 5%, whatever the number is, of that for an increase.

Your valuation will still show on your tax form, but they cap the increase.

The other part that will happen at some point in Wyoming is our taxes will actually go back down some, and no one believes that, but we've all lived through this.

We're a boom and bust state and as, we have particularly in energy (indistinct), taxes will go back down.

And our ag taxes are gonna be crazy.

And, you know, the ag people don't understand that they're based on production value, not on sales.

So if ranch next to mine sells, that sale price does not affect my taxes, but the price of commodities does and we've hit all-time highs.

And they're averaged out and as we average those, for those viewers, yours that are ag people, they can expect their tax to go up.

And it's not because somebody that was rich bought a ranch next door.

It's 'cause- - And it's not because you two are sitting here twirling your mustaches, saying, "Hey, let's raise that person's tax."

It just doesn't seem- - Yeah.

It's just a function of the system.

So, you know, President Driskill and I have made it a top, besides the budget, which is our number one priority in the budget session, our next priority is residential property tax.

- And these are not strict, these are not budget bills.

They have to do with money, but they're not part of the state.

- No, they're not part of the, these are separate bills.

It was the revenue committee's number one priority was residential property tax.

They've got several bills coming out of committee.

I've got a bill.

There's several individual bills coming.

And we will work these and try to find a way to provide targeted, responsible property tax relief to citizens of Wyoming.

Part of the property, you get in my area, you know, valuations have skyrocketed.

You go in some parts of eastern Wyoming and it hasn't.

And so you have these differences in what happens and you've gotta understand that this whole system's tied together and you can't cut taxes so much that an eastern county is robbed of its ability to care for its people because property tax is what was put in the constitution for the local government.

And so we've gotta be careful how we do that.

But recognize, I think we both recognize, I know we both recognize, that this large valuation increase has hit people too hard and particularly older people on fixed incomes too hard.

And so we want to try to make sure we get some good legislation out.

- And the impacts on local governments are widely varied.

Everyone says, "Well, you need to be fair to everyone across how it happens," and the fact is, if you're in Sublette County where Speaker Sommers is from, I think 80% of their taxes, local taxes, are mineral.

- 95.

- 95%.

So 95%.

So when their taxes change there, they're only affected by 5%.

Now, let's jump across to my side of the state and let's go to Sheridan County, who I believe is over 90% residential funded.

So in Albert's, when they do the cut, Speaker Sommers, the county says, "We're fine.

We've got plenty of money 'cause it's coming in off (indistinct) minerals."

In Sheridan County, when you do a 50% rollback on property taxes, you've now taken their local government, and if they're at 95, like I said, they really have taken a 45% actual cut.

My county commissioners in a couple of the counties where I live, Crook County and Weston County, the cuts don't sound very big, million and three, million and four.

And they're like, "That means either we don't blade roads or we lay people off in the courthouse."

Instead of having three people in the clerk's office, you have two.

Takes you an extra hour to get your license plates.

If we do these cuts and they're not done with really good thought, our local governments are gonna have to decide what services they don't provide locally and those affect the people that call us.

- The governor talked about the rebate program.

You mentioned it earlier as well.

He's requesting that it be increased this year.

What's your view on that approach to it?

- No, I agree.

What he did is basically fully fund it.

And then there's a bill in the House that passed introduction yesterday, one of the few, and it's taking another look at that refund program because we could perhaps still tweak it some to make it more available to lower income but not make it abused.

And so I think, I think we'll take a hard look at that bill and that idea.

- That's a great program.

We're looking at some others.

One of the base arguments we're having is do you do it broadly across all classes or do you try to target the people that it really hurts?

'Cause this is really hard.

Over 30% of the property taxes in the entire state of Wyoming come out Teton County.

And I'll probably anger your folks up in Teton County, but the truth is I'm not very interested in providing property tax relief to somebody that came in that's worth $85 billion, is in a $30 million house, and came here 'cause we have no personal income tax and doesn't pay.

I personally don't have a problem saying you probably should be paying more 'cause we're giving you some huge benefits on the other end that come off of it.

I feel very much different about the guy down the road from Albert or my place that, you know, they're struggling.

This may mean whether their kids, whether you have a family vacation, and at a very worst level, if you're on fixed income, some of the hard choices about what you eat and how you do your healthcare.

And when you get to that point, it's very personal.

And those things do happen.

And for all of us, we have great compassion.

And so from my end, I'm willing to be somewhat discriminatory and I'll take the hit for it, that those who are least able to pay should get some of the broadest forms of relief.

- One of the bills that's out there that also passed introduction yesterday is if you've been in your home, if you're over 65, you've been in your home 30 years, we're gonna give you half off your property tax, your residential property tax.

I think that will I bet pass in some form.

- It'll be amended up and down.

- Yeah, we'll dial that, we'll dial that in.

But I think that's an incredibly good idea.

- So my $300,000 house in Kirk County, that exact same house if it was sitting in Jackson is a three and a half million dollar house and I'd be in exactly the same point.

You'd be paying 25 or $30,000 of taxes.

I can look you in eye and tell you with me, that's a major chunk of my entire income.

If we were there, my wife and I, it totally changes how you live your life.

- When we were here a year ago, close to half the body were serving their first session.

They'd just been elected a couple of months before.

Are you seeing an improvement in the performance of knowledge level?

I presume now that there's been a full interim period to have committee meetings and come back for their second session now, that's a positive, I presume.

- I'm not sure that everybody understands the process entirely, or they understand, but they don't really recognize what they do.

Yesterday there was a group killed a lot of committee bills.

These are bills that we've worked over the interim, put a lot of time.

That doesn't mean that all committee bills should pass introduction.

Totally agree with that.

But I'm not, I don't think you should lose half your committee bills.

I'm not sure we did that, but it was probably close to that.

And the amount of money we, the legislature, spend in the interim, you know, to work these bills in different communities and then come down here and the bill really doesn't even get a hearing in its own committee, let alone on the floor to be debated because debate's so limited on introduction and, you know, I think it was a disservice to the legislature, a disservice to the system we've created, and, frankly, the amount of money that we lose when we do that, you know, we just as well have all sat home and not had an interim.

- You know, for legislators, they spend, most of them, approximately 10 or 15 days crafting these bills.

They sit with a group of people and they do the same debates we do in the legislature.

And it's heartbreaking after you spend all summer driving halfway across the state and you don't even have a chance to explain to the body fully what you did.

Somebody picked the bill up, read through it, decided they didn't like it, but weren't willing to let it come out to have the debate to explain what are we trying to deal with.

And this happened last year by the way, and it's part of where we got... We killed property tax reform bills last year in the very same fashion.

People, because they liked one idea over the other one, they killed bills.

And when we got to the end, we had one bill left alive, one passed, one left alive, and it got killed on the board because they were terrified it wasn't the bill they wanted.

And that's been a concern of mine even this year is one of our real problems is some of the people, it's like, "It has to be my bill," and mine is no is what bill are we gonna pass or what combination of them, but they're not gonna look like they started.

Albert was talking, Speaker Sommers, about his 30-year bill.

As he said, "I think it will pass," he also turned around and said, "It won't look like it does when I wrote it."

It won't be 30 years, it won't be this amount.

But as long as he's willing to accept the changes, it likely has a chance if somebody doesn't just kill it right off.

I know as I came in as a freshman many years ago, you go in in a long session and you kind of get in the stride of, and then the budget session comes and all of a sudden about halfway into it, you wake up and it's like, "Oh my gosh, we've got seven days left."

We've already missed some deadlines on your personal part.

It goes so fast from today on.

- Let's just say that the general session is a 40-day session.

The budget session, which is the mandated thing you have to do, is only half that long, and so you're on the, your foot on the gas.

- And it's a 2/3 majority to introduce any other bill.

And the reason they put that in is it should be a high bar to get into the legislature and, you know, and that's true.

And if those committee bills were indeed all bad bills or really controversial, it'd been different yesterday, but not all of them were.

And some of that's I think a function of learning as well.

I think over time, legislators understand the process more and find other ways to impact bills other than maybe killing them on the first day.

- And actually, those committee bills, back to what you're talking about killing them, they generally aren't legislator ideas.

These are nearly all bills that have been generated to solve problems that are in our community.

Somebody has a problem, there's this problem, and the committee bills tend to be the meteor issues that take really in depth, you know, an individual bill that deals with a single issue you can deal with.

These tend to deal with broader policy issues.

And so when you kill a big chunk of these, you've taken a good piece of the policy and it's left the legislature unable to deal with that policy change.

- It isn't just the legislators who noticed the bill has vanished.

The citizens do as well.

Like, guys, this is the thing I have been worrying about here for years, and on day one, it's gone.

- So, yeah, there was a committee bill on the House side that was a mental health redesign, part of the mental health redesign.

- I read that one.

- Been working on that for a while.

Literally that bill needed to pass to help save lives.

And because that bill didn't pass, we're not gonna be able to implement policy that, frankly, would end up saving lives.

And I don't, and I think that was explained on the floor, but you only have a short period of time.

So there are consequences, you know, consequences to votes.

- We did the same and we may run some fixes, but, you know, we killed our trust fund bill yesterday, which is really interesting.

The trust fund's funded, our new outdoor recreation trust fund.

It's fully funded.

The money's sitting in it.

And this bill was actually the rules on how to administer spending the money.

And our body actually, and I honestly believe it, thought they were killing the money in the program and what they killed was the rules.

So now we've got this pot of money sitting out there that it's in limbo.

One, can they spend it?

'Cause we didn't say they couldn't.

And now we've put no sideboards on how they do it.

So an agency's sitting out there- - [Steve] Thinking.

- Stuck.

And it's hard for them to make a good decision.

And those are what happens.

'Cause we didn't even debate ours.

It was on the consent list and it just went down.

They just voted against us.

So there wasn't even a chance to, Chairman Schuler was in tears at the end.

She said, "What should I have done different?"

And I said, "I don't know, but I really feel for you," 'cause they had spent an immense amount of time putting that together.

- And I just wanna make the point.

You look at the gridlock in Washington, D.C. What's the result of gridlock in Congress or in the legislative space?

What happens then is the executive has to assume more power to get stuff done.

And so you increase the power of the executive because you're unwilling to work those tough bills that need to be worked.

And in the end, we need to work bills.

We need all the minds looking at bills.

Does that mean your idea's gonna survive all the time?

No.

Does that mean all of these committee bills should have passed?

Absolutely not.

We have to be functional in order to ensure that the chief executive doesn't have more authority and power than they should.

- Gentlemen, we're already out of time, and thanks for being with us on "Capital Outlook."