While news that income for state government is running slightly ahead of projections is good, concerns still surround the long-term outlook for the state, according to a senior fiscal expert.
Kevin Hibbard, director of the state Budget Department, said a report issued last week showing that revenues for the state’s main bank accounts are running ahead of projections by about $73 million is good news for the short-term.
“The long term is a little bit scary,” he said.
A group of state fiscal experts known as the Consensus Revenue Estimating Group makes regular projections on how much revenue the state will receive to pay for its two-year budget.
An update on the actual flow of income to the state issued Friday showed income for the state’s two main bank accounts, its “general fund” and “budget reserve account,” are running about $73 million ahead of the projections. All told, income for all the state’s major accounts is more than $100 million above estimates as of the end of March.
The higher revenue, along with cuts of more than $500 million made to the state’s current budget by Gov. Mark Gordon and the Legislature, should make it possible to finish the fiscal biennium in June 2022 without more cuts, Hibbard said.
“We can hold the budget that the Legislature has in place now,” he said.
However, he added that going forward, the state still has to deal with the impact of the halt of energy production on federal lands by the administration of President Joe Biden.
“We don’t know what the extent of that is going to be,” he said.
The moratorium will have more of an impact on Wyoming than other states such as North Dakota because those states have more leases on state land, he said.
He added drilling activity has declined significantly recently.
“In 2019 about this time, we had 25 rigs,” he said. “We’ve got seven now. We’re selling oil, but we’re not drilling as much.”
Hibbard also noted the Legislature put off any major maintenance work on state buildings to balance the current state budget. However, major maintenance expenses are projected to reach $129 million in the 2023-24 biennium, exceeding the revenue gains reported Friday.
“So if right now we are $100 million better off, we just put $129 million back in there,” he said.
Hibbard added the recent gains could be reversed given the fluctuating nature of Wyoming’s revenue.
“We are suggesting we collected more than anticipated, but that could change,” he said.
Hibbard is already working on the budget for the 2023-24 biennium, which begins July 1, 2022, and ends June 30, 2024.
The budget to be presented by Gordon in November and reviewed by the Legislature in early 2022 will depend heavily on the information provided by CREG in its October report.
“So we’ve got a couple more quarters to go through,” he said. “Hopefully revenue will continue to climb.”
