Wyoming invests wisely

By Steve Hallock

What ought to be an exciting time in a student's life, the beginning of university classes, is more daunting this year. Thanks to cuts in education spending, in-state students at Temple University face a roughly 10 percent tuition increase. University of Pittsburgh resident students will pay 8.5 percent more; Penn State students 4.9 percent more; and resident students of the state-owned universities 7.5 percent more.

Meanwhile, the governor's Marcellus Shale Advisory Commission has put forth 96 recommendations on how the state should deal with this natural-gas boom. If only the good-news road of this industrial boon could intersect with the bad-news highway of education cost-cutting. But even though the commission's recommendations include the levy of a fee on natural-gas companies, that money is to be earmarked for communities hosting the drilling and production. The governor has nixed any severance tax on this abundant natural resource.

If only Pennsylvania legislators and the governor would follow the example of other states, some of which use oil, gas, and mineral severance taxes to help pay for services - including higher education.

One of them, Wyoming, wealthy in natural gas, oil, and coal resources, provides an enviable example. With a Republican governor and legislature every bit as conservative and business-friendly as Pennsylvania's, Wyoming long ago saw the wisdom of using its mineral and resource wealth to invest in education. And the levying of energy severance taxes did not send the oil and gas companies scurrying away.

For example, Wyoming's Hathaway Scholarship Program endowment, begun in 2005, is now worth nearly $500 million, consultant Julie Magee said during a recent telephone interview. The program offers four different merit college scholarships along with a needs-based stipend to qualifying students. Taxes on the state's mineral resources fund it.

According to Don Richards, the state's director of government and legal affairs, Wyoming, which has no state income tax, levies a sales tax for the general fund; a property tax, with revenues dedicated to local school districts; and severance taxes on various minerals and resources. These include, in order of revenue generated, natural gas, coal, oil, trona, and uranium. Natural gas, with its 6 percent severance tax, "is king," Richards said.

The severance tax, which generated $927 million in fiscal year 2010, provides about 20 percent of the state's annual budget, said Bill Mai, budget and fiscal manager for the Wyoming Legislative Service Office. The severance tax, plus federal mineral royalties and fees, enable Wyoming to provide the highest per-university-student appropriation this year of any state in the union, according to Richards.

Is it the specific intent of the legislators and governor to use the state's mineral and resource wealth for education? "I don't think I'd describe it as an intent, but they certainly have used the state's wealth to support education," he said.

If only the political leadership of Pennsylvania shared that attitude. If only this state's residents could see a newspaper editorial such as one published a couple of years ago by the Casper Star Tribune, congratulating the University of Wyoming "for holding the line on its resident undergraduates for the third consecutive year."

"Throughout the country," the editorial observed of university budgets, "many are tightening their belts by announcing hiring freezes, postponing construction projects, and determining whether families can afford tuition increases.

"But Wyoming's energy-based economy has remained largely unaffected by national problems, enabling UW to comfortably manage with its share of state revenue from mineral severance taxes. ... "

If only.