Posted at 2:30 p.m., Dec. 8, 2015

Wyoming budget faces shortfall

Wyoming is facing a state budget shortfall of more than half a billion dollars that is projected to last three fiscal years.

Consensus Revenue Estimating Group (CREG) released a Wyoming State Government.

Revenue Forecast for fiscal years 2016-20. The estimate includes a total shortfall of more than $600 million because of the decrease in mineral prices.

Wyoming has become known for the economic boom-and-bust cycle. However, legislators have hope in coming out of the cycle by steading the economy.

Rep. Mary Throne, D-Cheyenne, said there is no need to panic and government needs to be deliberate in its approach.

Throne said Cheyenne’s economy is different than the rest of the state because it is more diverse.

However, the main component of Wyoming’s economy is minerals. The state itself does not have control over price of the minerals; it is priced on the world market, especially oil. Over time, oil has become the victim of its own success, Throne said. Currently the price of oil is less than $50 per barrel. Natural gas has a supply and demand, but there is too much gas that it has taken an economic decline. Coal is also facing challenges that comes from the effects of gas and the declining need for coal.

Throne said she hopes to see raw materials used more efficiently someday to help stabilize the economy.

Maureen Bader of the Wyoming Liberty Group said there has been a drastic decline in oil and gas revenue because of an oversupply of gas and oil across the United States, yet production has not ceased even though prices have fallen.

Along the same lines, Rep. Sue Wilson, R-Cheyenne, said Wyoming has become dependent on energy sectors, which include oil and gas. She said there are other reasons why Wyoming is looking at a bust, including no state income tax and 60 percent of property tax coming from minerals.

In October, CREG released the revenue forecast for fiscal years 2016-2020. “That’s exactly what it is, an estimate,” Throne said as she explained how the state might not be getting the full picture from the document released.

The first chart seen in the document shows that Wyoming has a $600 million total decrease, however, after adding in other revenues that Throne said the government knows it will receive, the total decrease is more like $300 million. Also, Throne said there is currently more than $1.8 billion in the trust fund, otherwise known as the “rainy day” fund, that could be used in dire situations.

“What extent do we use the reserved account?” Wilson asked.

It may be helpful to use the fund to help lessen the blow, but Wyoming also needs to make cuts. In other words, do an all-around trim on revenue and spending, Wilson said.

Both Wilson and Bader pointed out that the last downturn lasted 17 years. Wilson said this was because of the after-effects with small businesses and other factors that can be effected by the shortfall. “So we need to look at a 10-year downturn,” Wilson said.

“We need to be careful how we handle this downturn because it will be lasting longer than three years,” Bader said, adding that the government want to ensure a fund for future generations, but also lessen the blow. There needs to be a balance, she said.

Throne, Wilson and Bader have taken part in the discussion on how the state should respond to the shortfall in one way or another. Throne said there is no need for drastic cuts, but government needs to react calmly, address needs and prioritize.

There has been no discussion of layoffs that she has heard, but Wilson said it is the governor’s job to put a budget plan together to present to the community.

“I believe that construction will be taking a hit when it comes to the budget,” Wilson said.

Bader said, “I do not believe that the government should depend on the community to lessen the blow.” She believes the last thing the government should do is raise taxes because the population of Wyoming is simply too small to support the whole government.

The Clean Power Plan is a federal plan to reduce the use of coal and expand on the use of natural resources. However, Throne said the government does not know how the plan affects state budget yet simply because it’s too new.

She isn’t fully familiar with the act, and part of this is because the document is 1,500 pages long and full of complex ideas, she added. Currently, Throne and other government members have questioned if the plan is legal because it includes reconfiguring electrical use and reducing the use of coal. However, Throne said eventually greenhouse gases will be regulated since it is a valuable, reusable material.

Wilson said the plan makes coal less profitable, which is 40 percent of U.S. energy source.

“There is a potential market with coal, but transportation is a problem when the U.S. wants to transport the coal to other countries,” she said.

Related articles: