Coming statehouse debate: What to do with $1B in fed stimulus?


The way Rep. Lloyd Larsen (R-Lander) sees it, the $1 billion-plus windfall coming to Wyoming through the American Rescue Plan Act is a little like an inheritance from grandma. 

It’s an unexpected, huge sum that can change the arc of life ahead: The two $523-million stimulus payments together are equal to over 40% of the $2.3 billion budget that Gov. Mark Gordon has proposed for 2023-24. And nearly half those funds qualify as “revenue replacement,” which means they can be saved, invested or used with minimal restrictions.

“Do I go out and squander it by taking a fishing trip to Alaska, as much as I want to do that?” Larsen asked. “Or do I invest it so I get a better return on my retirement? Or maybe I pay off my house? Those are the choices.” 

Larsen, a member of the Wyoming Legislature’s Joint Appropriations Committee, will be party to the debate over what ought to become of the one-time infusion of cash. Proposals have thus far mostly eschewed using the funds to supplement the biennial budget or backfill past cuts. Upcoming choices, Larsen anticipates, will center around savings and investments in programs intended to buoy the state’s long-term economic prospects.  

“The one thing we will avoid is the fishing trip to Alaska,” he said, “because we don’t want to squander it.” 

A monthslong planning effort led by a Gordon-assembled “strike force” preceded the committee’s ARPA funds deliberations, which begin Friday. That effort entailed a call for proposals from state agencies, county and municipal governments and others. Collectively, participants pitched nearly $4 billion worth of ideas, four times more than is available, said Sen. Drew Perkins (R-Casper), who chairs the appropriations committee. 

“People want to add money to the Hathaway [Scholarship], people want to create a new endowment to help fund junior colleges,” Perkins said. “Somebody wants to build a road between Rock Springs and Green River. We’re probably going to have $2 to $3, maybe $4 billion worth of legislative requests.” 

Based on the proposals submitted and guidance from his strike force of cabinet members, legislators and local elected officials, the governor has made specific recommendations for how to use about $500 million of the stimulus funds. 

The suggested spending is tailored to Gordon’s “Survive, Drive and Thrive” plan, aimed at helping Wyoming pull out of the pandemic with a focus on healthcare, social services, education, workforce, and economic diversification and development. The specifics were presented to the public last week during a virtual town hall-style meeting. Comments on the spending plan are also being taken through the end of the week. But the proposals headed to the Joint Appropriations Committee aren’t likely to change, Gordon policy director Renny MacKay told attendees of the livestreamed town hall. 

The largest slice of Gordon’s recommendations would go straight into savings: $150 million of the more-flexible “revenue replacement” dollars Wyoming was awarded would be socked away. 

The next-largest specific proposal is for more than $100 million to be set aside as a potential match for further funds for continued energy development such as a commercial-scale carbon capture and utilization project. In the meantime, the nine-figure sum would sit in the Legislative Stabilization Reserve Account — commonly called the rainy-day fund. 

“We’re hopefully turning that $105 million into maybe five, 10 times more than that,” Wyoming Business Council CEO Josh Dorrell told attendees of the virtual meeting. 

Other recommended projects range from $125,000 in matching grants for humanities-based programs to a $75 million addition to the Wyoming Wildlife and Natural Resource Trust. There are also very specific proposals: $10 million for a planned I-80 wildlife overpass at Halleck Ridge near Elk Mountain and $84,000 to develop an EMS dispatcher certification curriculum. 

“I think the governor’s got some really good ideas in there,” Sen. Larry Hicks (R-Baggs) told WyoFile. “Those things that we really like, we’re probably going to support him 100%. And those things that we have concerns with, we’ll probably negotiate a middle ground.” 

After the recommendations are initially carved up in the Joint Appropriations Committee, which Hicks sits on, the spending and savings plan will have to pass muster with the Legislature as a whole. Initially, state solons eyed a midsummer special session to allocate the funds, but the decision-making was put off until now after it became apparent that Wyoming’s economic outlook was better than anticipated and the federal government extended ARPA deadlines

Few expect the appropriations bill that eventually makes it to Gordon’s desk to contain everything the governor requested. 

“We’re not trying to throw the baby out with the bathwater, and I don’t think anybody wants to take this recommendation that the governor brought and just pitch it aside,” Larsen said. 

Larsen has read Gordon’s recommendations, a 16-page letter, three or four times and marked it up with smiley and frown faces. 

“I think there are some things that will just go away,” he said. “And hopefully there’s things we stick in its place that make this whole document stronger and better. The effort to remove something isn’t going to be malicious.” 

Hicks, Larsen and Rep. Andy Schwartz (D-Jackson) all told WyoFile that they’d consider funneling some of the ARPA funds toward the $4 billion Common School Permanent Lands Fund, which generates investment income for K-12 education. The stimulus dollars can’t be invested directly, but can be spent on government functions that allow an equivalent amount of general budget money to be squirreled away into permanent funds. 

Investment income from a hypothetical $200 million contribution to the school fund, Hicks said, could fulfill about 10% of the $200 million annual shortfall in funding needed for K-12 education across Wyoming. 

“We have a structural deficit that’s going to eat our lunch if we don’t come to grips with it,” Hicks said. “I personally have a bill that would start with $100 million in the Permanent Mineral Trust Fund, $100 million in the Common School Land Fund and $100 million in the Wyoming Wildlife Natural Resource Trust Fund. Those numbers will change as it gets into the legislative process, but that’s my starting point.” 

The “cautious” approach espoused by the strike team and Gov. Gordon is a prudent path forward in the view of University of Wyoming economist David Aadland, who directs the new Center for Business and Economic Analysis. 

“For example, I think that putting $100 million or $105 million in the rainy day fund to try to encourage matching private and public partnerships to invest in large-scale energy projects makes a lot of sense,” Aadland said. 

University of Wyoming first-year economics students, he said, learn about a concept called the “permanent income hypothesis.” The theory holds that when a household receives a permanent increase in income, they spend more, because the money can be expected to keep coming. 

“But when it’s temporary, the theory says you should save a larger portion of that,” Aadland said. “I feel like what’s going on here with Wyoming: Legislators and policy makers are applying the permanent income hypothesis, because, after all, this is temporary money.” 

Some decisions can be put off. Wyoming has until 2024 to appropriate a  share of the ARPA funds, $544 million, that are subject to guidelines released last week by the U.S. Department of the Treasury. That sum must be spent by 2026. The balance, $502 million eligible as revenue replacement, is not under those same restrictions. 

“In the end, this is a once-in-a-generation opportunity,” Perkins said. “Altogether, you’ve got a billion or so dollars. What do we do with that so that it doesn’t evaporate? 

Used wisely, Larsen said, the unanticipated ten-figure sum from the federal government could “help drive the state’s direction for the next century.

“We have an opportunity to help broaden or smooth out the path of Wyoming going forward for generations to come with programs and investments that won’t disappear in six months,” he said. 

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