Revenues needed to run the state will decline dramatically in the next several years from projections made before the coronavirus was detected in Wyoming, according to an analysis by a state agency.
The analysis by the Legislative Service Office, the agency tasked with providing administrative services for the Legislature, found that the state’s revenue could fall from current projections by $555.8 million to almost $2.8 billion by the end of fiscal 2022.
The Legislature, during its recent budget session, based its budget for the fiscal 2021-22 biennium on projections made by the Consensus Revenue Estimating Group, a group of fiscal analysts from different state agencies who meet several times a year to provide their estimate on how much money the state will have to work with.
However, the last such projection was provided in January, before the coronavirus shut down much of the economy.
As a result, the LSO, in response to requests for information, prepared its own analysis showing three possible scenarios for the state’s revenues from April of this year through the end of the coming fiscal biennium in June of 2022.
“In light of the last month’s unprecedented economic developments, the January 2020 Consensus Revenue Estimating Group … forecast is no longer a reasonable projection of state revenues in the near-term,” the analysis said. “Wyoming’s economic outlook has changed significantly.”
The analysis provides three scenarios based on different assumptions: “optimistic,” projecting a shorter economic downturn and quicker recovery; “intermediate,” based on actual mineral futures prices, economic disruption through the summer and a modest recovery over the next year, and “pessimistic,” based on a drawn-out crisis with an extended recovery.
The LSO admitted the scenarios are “informed guesses.”
However, it also noted that in addition to the coronavirus, Wyoming has already been hit hard by an oil price war between Saudi Arabia and Russia that has left oil prices depressed.
Under the optimistic scenario, income through the end of fiscal 2022 will decline by $555.8 million from January projections. The intermediate scenario predicts a drop of $1.7 billion and the pessimistic predicts a decline of almost $2.8 billion.
The impact to the state’s main checking account, its “General Fund,” could range from $254.6 million to $1.4 billion, the analysis said.
Funding for the School Foundation Program Account and School Capital Construction Account might fall by $136 million to $526 million, the analysis said.
The state’s oil tax income will be the revenue source hardest hit compared to earlier projections, the analysis said, dropping by $494 million to just over $1 billion between now and the end of fiscal 2022.
Coal tax income will also decline by $203 million to $437 million, the analysis said.
Sales and use taxes will drop by $147 million to $869 million.
The analysis should be seen only as a starting point for discussions as officials try to determine how to react to the coronavirus pandemic, said Don Richards, the LSO’s budget and fiscal administrator.
“It really is just a platform for discussion,” he said.
