Poverty and Wyoming’s Budget
Wyoming’s next legislative session will be a 20-
day budget session, beginning in February 2004.
During this time, the Legislature will debate and
vote on the biennial budget that will carry the state
from July 2004 through June 2006.
The Joint Interim Appropriations Committee
(JAC), made up of the Senate and House Appropriations
Committees, already is hearing and evaluating
budget requests from agency heads.
One of the most newsworthy so far is the large
request from the Department of Health, due mostly
to increases in Medicaid (health care for lowincome
individuals and families).
The increase is due not only to rising medical
costs, but also to a 39% increase in enrollment—that
is, Wyomingites eligible for the program.
Why are these increases occurring, when
Wyoming’s poverty rate is relatively low?
To answer this question, we need to understand
why a family with an income above the poverty
level can still be in dire economic straits.
Nine percent of Wyomingites live below the official
poverty level—an income equal to or less than $18,400
for a family of four in 2003. Another 3.2% live below
125% of the federal poverty level—less than $23,000 for
a family of four.
Although a 9% poverty rate is relatively
low in comparison with other states, it
does not reflect real economic conditions in
Wyoming, which has the highest percentage
among the states of people working two or more jobs.
People end up working multiple jobs because
they cannot earn enough at one job to support a family’s
basic food, shelter and health needs, even though
they may be earning more than the federal poverty
income (see page 2).
How is the Federal Poverty Level Determined?
The method for calculating the federal poverty
level was developed in the 1960s and has changed little,
although the modern family’s typical expenditures
are much different than they were 40 years ago.
For example, child care and transportation (both
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The method for calculating
the federal poverty level
was developed in the 1960s
and has changed little.
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relatively expensive items) now consume a large
portion of many families’ budgets, in contrast to
typical 1960s expenditures, which were heavily
weighted toward relatively inexpensive food.
Despite these significant limitations, the federal
poverty level still is the trigger for all types of economic
assistance programs.
Individuals and families qualify for food stamps,
child care assistance, help with housing and utilities,
access to health care, etc., based on how their
income compares to the federal poverty level.
Thus it is critically important that the federal
poverty level reflect actual costs of living.
Unfortunately, it is far too low.
(Note: Federal and state programs
actually use more precisely
defined terms than “federal
poverty level” to implement
their programs. However,
we are using that more general
term for ease of explanation.)
A More Realistic Measure: Family Budgets
Economic experts now are proposing a different
measure of poverty: family budgets.
A family budget is based on what it actually
costs a family of given size (for example, one parent,
two children) to cover basic economic needs:
- monthly rent and utilities;
- food;
- health insurance;
- child care;
- reliable transportation; and
- taxes.
Note that even this list of items comprises only
a bare-bones budget. It does not include any
“extras” like music lessons, sports or savings; nor
does it cover other needs such as legal
assistance.
A pioneering study by the Economic
Policy Institute of Washington, D.C. calculated
family budgets based on state-specific
cost data, e.g. what it costs to rent an
apartment in Cheyenne or Casper.
The researchers found it costs a
Wyoming family of four (one parent, three
children) approximately $34,000/year to
meet the basic family budget outlined
above. This is nearly twice the federal
poverty level for a family of that size.
Approximately one in five Wyomingites –
100,000 adults and 30,000 children – fall into the
“economic security gap” between the federal
poverty level and a basic family budget.
This 20% of the population in the economic
security gap is in addition to the
nine percent living below the official
poverty level, meaning that close to a
third of Wyoming’s population is not earning
enough to cover basic needs.
Families in the economic security gap
have one or two parents working, but not
making enough to pay the rent, put food on the
table AND buy health insurance. An illness or
vehicle breakdown will send the family into an
economic tailspin.
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A Hand Up, Not a Hand Out
Currently, no public assistance programs
offered in Wyoming extend to individuals or families
with incomes up to 200% of the federal poverty
level.
The closest is KidCare, which provides health
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Close to a third of Wyoming’s
population is not earning
enough to cover basic needs.
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care coverage for children (but not adults) in families
with incomes up to 185% of the poverty level,
increasing to 200% by July 2005.
Funding for KidCare is provided primarily by
the federal government ($1.76 million, or 73% of
the program’s cost), with the rest appropriated
from Wyoming’s general fund.
A study by the Wyoming Hospital Association
and the Wyoming Department of Health showed
that KidCare helps reduce the growing uncompensated
care burden on Wyoming’s hospitals. With
Kidcare coverage, parents can take their
children to a doctor’s office or clinic
for routine care instead of the
emergency room.
The Joint Interim Labor,
Health and Social Services
Committee is currently considering
expanding KidCare to include
uninsured adults.
The need for such a program is
shown by Wyoming’s two free medical
clinics in Laramie and Cheyenne, and
Casper’s Community Health Center. In all
three facilities, the typical client is a woman
between 20 and 60 years of age, often a mother
working at an unbenefitted job.
Various other programs offer some level of
assistance to families with incomes above poverty,
but not enough to move them to a level of basic
economic security.
Gender Wage Gap
According to a 2003 study,
Wyoming has the sorry distinction
of having the worst “gender
wage gap”—the difference
in the average wage earned by
women and by men—in the
nation.
In 1999, Wyoming women
earned $0.49 for every dollar earned by men, compared
to a U.S. gender wage gap of $0.64 earned by
women for every dollar earned by men.
After the national study was released, the
Wyoming Legislature funded a study (conducted by
the University of Wyoming) to look at the causes of
the gender wage gap and make recommendations
for closing the gap.
The study found that the gender wage gap is due
largely to a concentration of women in lower-paying
occupations, such as teaching and nursing, and
in part-time jobs.
The study recommended encouraging women to
enter traditionally male (and higher-paying) occupations,
and to move into full-time employment.
However, since these are not options for many
women (and our society needs many more teachers
and nurses than heavy equipment operators), the
study also suggested looking at ways to raise salaries
and wages in the female-dominated occupations.
The ESPC is currently seeking funding for modeling
the economic effects of raising salaries for
teachers and nurses.
Economic Development and Poverty
Many people assume that if new businesses
come to town, it obviously means more money in
the local economy and more taxes paid into state
coffers. However, this may not necessarily happen.
If a business brings in
workers and does not pay
them a living wage and benefits,
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If a business pays relatively low
wages and does not provide health
insurance, the local public hospital’s
indigent care burden may increase.
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the local and state governments
may find more
demands on their services and
less money to pay for them.
For example, if a business
pays relatively low wages and
does not provide health insurance,
the local public hospital’s indigent care burden
may increase, and/or local and state governments
may experience increases in Medicaid and
KidCare enrollments.
This problem is exacerbated if tax “incentives”
(reductions) are offered to attract businesses. States
that offer income or property tax reductions—which
Wyoming cannot do because of constitutional
restrictions—have found themselves with increased
education and welfare expenditures at the same
time their tax bases were eroded by incentives.
Wyoming does offer a limited number of sales
tax exemptions for certain purchases—such as aviation
equipment and farm implements—as an economic
incentive.
Tying Tax Breaks to Jobs
The Joint Interim Revenue Committee will
sponsor a 2004 session bill to exempt purchases of
manufacturing equipment from the state sales and
use tax.
In its testimony on the bill during the interim,
the ESPC suggested making any tax exemption contingent
upon a showing of positive economic benefits
from the business.
The Joint Committee took initial steps in this
direction by amending the bill to require more
extensive reporting on salaries and wages (differentiated
by gender), other taxes paid, and other measures
of the economic benefits provided by the
recipient's operation.
The Joint Committee also directed the
Department of Revenue to look into
evaluating the economic effects of
sales tax exemptions, and ways to
link exemptions to job quality
standards (for example, a specific
number of full-time jobs at or
above a specific wage level).
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