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Wyoming Cities Have Different Responses To Severe Tax Declines

in Coronavirus/Economy/News
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By Wendy Corr, Ellen Fike and Mari Heithoff — Cowboy State Daily

Like Wyoming’s counties and the state itself, Wyoming’s cities are having to reduce their spending in the face of declining tax revenues.

Officials in different communities are taking different steps to make their budgets balance, from spending cuts to hiring freezes.

The mayors of Lander, Cody and Cheyenne told the Cowboy State Daily that their coffers had already been squeezed by tax income declines even before the coronavirus pandemic that resulted in business closures.

Lander

Lander had already been forced to make budget cuts of $650,000 and may have to reduce spending by another $300,000 by the end of the year, said Mayor Monte Richardson and Treasurer Charri Lara.

The city has seen a significant drop in revenues with the collapse of coal and oil prices, the two said, along with the reduced sales tax revenue.

“The projected sales tax decline was around 20%,” Lara said. “We’ve dropped below that and we’re not sure how far it will go.”

The cuts will ultimately have an impact on Lander’s citizens in the form of reduced services, Richardson said.

“We’ve cut the police department, the Parks and Rec Department, the cemetery,” he said. “We’ve cut most of our part-time summer help. The differences we’ll see are like a pyramid. If the city has to make budget cuts, we just won’t be able to provide the same services we have before.” 

Complicating the issue is a possible reduction in the amount of money the Legislature makes available to Wyoming’s cities. With the state facing a $1.5 billion deficit, some believe the those payments to the cities may be reduced or eliminated.

“The Legislature dictates supplemental sums to the city, and we don’t know yet how big those cuts will be, but Wyoming has to cut $1.5 billion over the next two years,” he said. “That’s 750 million a year, which is a huge amount to cut.” 

Cody

Cody started economizing some time ago, said Mayor Matt Hall, by not filling jobs that came open through retirement and by consolidating positions to give more responsibilities to fewer employees.

“We have asked, and we continue to ask, employees to wear a couple of different hats now, to troubleshoot things that they wouldn’t normally have to do had we been able to hire another person,” he said. “So we’ve lowered the amount of people working for the city, but when you have less people, things start slipping through the cracks.”

He said the personnel reductions would make themselves felt in areas such as maintenance to city parks and possible skipped days on garbage pickup. 

“New technology and IT stuff we’ve had to put off,” he said. “We’re putting off maintenance things, that, if we keep putting them off, we’ll end up re-doing, which costs an order of magnitude higher than just by doing some basic maintenance.”

Cody has already tapped its reserves for emergencies for about the last 10 years, Hall said.

“Essentially we’re using reserves to balance the budget,” he said. “The auditors recommend that we have a certain amount in reserves, to cover big expenses for emergencies, but for the most part, we are slowly whittling away the reserves that we’ve set aside for emergencies.

Cheyenne

Heading into the new fiscal year knowing tax income would decline significantly, Cheyenne Mayor Marian Orr asked her department heads to prepare a budget 20% below current levels.

The end result was a budget with percentage cuts ranging from the single digits in Public Safety to a cut of 19% in Orr’s office, she said.

“I’m feeling pretty optimistic,” she said. “We made cuts early in the budgeting process, so I don’t think we’ll have to do cuts, layoffs or furloughs in the future.”

Officials had initially believed sales tax income would decline by 25% in the coming year, but Orr said new information indicates the decline might be closer to 11%.

She added there has also been some good economic news for the city with increases in large consumer purchases such as cars and recreational vehicles.

However, Orr expressed concern about a reduction in the amount of money given the state’s cities by the Legislature, which she said has amounted to about $4 million on past years.

If the state does not provide those payments, the city may have to ask voters to approve a sales tax increase, she added.

“Because I don’t know where we’d find $4 million extra in our budget,” she said.

The city’s latest budget did take the cancellation of Cheyenne Frontier Days into account, Orr said.

“But it will be interesting to see overall how the spending patterns come,” she said. “Maybe we’ll see tourism in a different way in the city and county.”

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Wyoming’s Economic Health in April Worst in 15 Years

in Coronavirus/Economy/News
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By Jim Angell, Cowboy State Daily

Wyoming’s economic health in April was at its lowest level seen in 15 years, according to a state agency.

The state’s Economic Analysis Division, in its June report on the state’s economic indicators, reported that the state’s economic health in April was given a score of 95.2, the lowest score recorded since the measurement was first taken in January 2005.

A score of 100 indicates the state’s economic health is equal to conditions seen in January 2005. A higher score indicates improvement and a lower score indicates worsening conditions.

The EAD, a division of the state Department of Administration and Information, said the four economic indicators used to determine the state’s economic health all declined significantly in April from March, when the economic health index was set at 104.3. Unemployment was the biggest contributor to the decline, the report said.

“This large drop in the index from March 2020 was primarily due to a sharp increase in unemployment resulting from the COVID-19 pandemic,” the report said.

The economic health index in April of 2019 was set at 105.9.

The index is determined by reviewing the state’s monthly unemployment rate, monthly total non-farm employment, sales and use tax collections from the mining sector and sales and use taxes from lodging.

Wyoming’s unemployment rate increased significantly in April from March, growing to 9.6% from 3.8%.

Non-farm employment dropped by 24,000 in April to total 262,400, sales and use tax collections from the mining industry fell by $2.7 million to total $6.4 million and lodging tax income totaled $640,000, a decline of 50% from numbers posted in April of 2019, the report said.

“This 50% year-over-year decline ties the largest decline for any month over the past 15 years,” the report said. 

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Wyoming Unemployment Dips Slightly In Show Of Modest Economic Improvement

in Economy/News
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Wyoming’s unemployment rate fell slightly in May from April, indicating a modest improvement in the state’s economy, according to the state Department of Workforce Services.

The agency’s Research and Planning Section said Wyoming had a seasonally adjusted unemployment rate of 8.8% in May, compared to a rate of 9.6% in April.

“It appears that the state’s economy improved modestly in May as COVID-19 pandemic restrictions were loosened and some businesses reopened,” the DWS said in a news release.

The state’s unemployment rate was far below the national average of 13.3% and was among the lowest in the nation. Nebraska, at 5.2%, and Utah, at 8.5%, had lower rates.

However, the unemployment rate was the highest seen since March of 1987, when the rate reached 8.9%

The numbers mean that more than 25,900 people were without work in the state in May, an increase of more than 15,500 from May of 2019.

The DWS said unemployment rates fell in most counties in April, with the largest drop occurring in Teton County, where the rate fell from 18.2% to 14%, Sublette, from 22.4% to 9.8%, and Johnson County, from 9.7% to 8.1%.

The rate went up slightly in Converse County, from 6.4% to 7.3%, and Carbon County, from 6.8% to 7%.

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WYDOT To Close 10 Rest Areas To Cut Costs

in Economy/News/Transportation
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By Ellen Fike, Cowboy State Daily

The Wyoming Department of Transportation will close 10 rest areas throughout the state later this month to reduce the agency’s operational costs.

In a news release issued Friday morning, Gov. Mark Gordon announced the closures will be effective June 15 and are prompted by a need for WYDOT to reduce costs due to budgetary shortfalls.

The closures were approved by the Wyoming Transportation Commission during its recent special meeting.

“This is a painful reality but a necessary step given our state’s fiscal situation,” Gordon said in a news release. “This will have real impacts, not only for travelers, but for the custodial staff contracted to provide services to these facilities. These workers are our friends and neighbors in Wyoming communities around the state.”

The rest areas that will close include those near Lusk on U.S. Highway 18; Guernsey on U.S. 26; Greybull on U.S. 14-16-20; Moorcroft on Interstate 90; Star Valley on U.S. 89; Fort Steele on Interstate 80; Sundance on Interstate 90; Upton on U.S. 16, and Orin Junction and Chugwater, both located on Interstate 25.

“We took a hard look at all of our rest areas and came up with a list of those that we feel we can close with a minimal amount of impact to our travelers,” WYDOT Director K. Luke Reiner said in the same release. “It was a hard decision but one that we came to based on the needs of the public and to ensure we maintain a balanced budget.”

WYDOT officials sent letters to local community leaders and the contractors who work at the rest areas notifying them of the closures.

The rest area closures will result in a savings to WYDOT of approximately $197,453 from June 15 through Sept. 30. After that, the department will save about $789,812 per year.

“Although these rest areas will close, motorists will still have access to facilities in neighboring communities,” Reiner said. “Each of the rest areas that are closing are within a reasonable distance of a town that has facilities for the public.”

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Gov. Gordon To State Agencies: “Prepare For Cuts By 20%”

in Coronavirus/Economy/News
4762

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By Jim Angell, Cowboy State Daily

Gov. Mark Gordon has asked his agency heads to prepare plans to cut their spending by 20% to deal with dramatic reductions in revenue for the state, he announced Thursday.

Gordon, during his weekly news briefing, said significant declines in mineral tax income, the state’s chief source of income, and revenue losses related to the coronavirus have left the state with the largest loss of income it has ever seen.

State agencies have been directed to do everything they can to cut spending immediately and to develop plans by July 1 to cut spending even more, including by eliminating of programs and jobs, Gordon said.

A report from the state’s Consensus Revenue Estimating Group recently said that the state’s income will fall by $1.5 billion during the coming 2021-22 biennium from estimates used to craft the budget for the biennium.

As a result, even though Wyoming has been spared from many of the negative impacts other states are seeing from coronavirus, it will still have to make adjustments, Gordon said.

“We’ve still seen those reductions and like any business anywhere, Wyoming has go to make the reductions and cuts it needs in programs in the people who run those programs,” he said.

Gordon said he would keep Wyoming residents apprised of proposed program cuts and the impacts those cuts will have around the state.

“It’s important that I speak directly, frankly and without trying to sugar-coat anything about the crisis that we face,” he said. “I promise that not only will we do the cuts that are necessary, but we will tell you what that is going to mean to your community, to the people in your community. Things like whether we can plow your roads all night.”

Any decision made will be made with an eye toward keeping Wyoming functioning and progressing in the future, he added.

“It is not lop off an arm or leg and say we’re good,” he said. “It’s about planning for our future.”

There is no way the state can cut spending enough to make up for the revenue losses, Gordon said, which means the Legislature may have to look at using reserve funds or increasing taxes.

Gordon said he would like to see a thorough review of all tax exemptions.

“One of the things we should start with is all the tax exemptions,” he said. “Maybe they should be eliminated. There are other options out there on the table, but I think we start with where we’ve given up sales tax income.”

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Gordon Tells State Agency Heads To Prepare For Drastic Cuts

in Coronavirus/Economy/Mark Gordon/News
4760

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By Jim Angell, Cowboy State Daily

Gov. Mark Gordon is asking state agency heads to do whatever they can to reduce spending and to prepare for more spending cuts in coming months in response to what he said was the largest loss of income in state history.

Gordon, in a news release Thursday, said he is directing agencies to immediately take any action they can to reduce spending and then to prepare for future cuts by identifying programs that can be eliminated. He said such steps will undoubtedly lead to job losses and added he is also asking agencies to consider salary reductions, furloughs and reductions in benefits.

The state’s revenues have been significantly reduced because of declining mineral revenues and income losses associated with the coronavirus.

A state report recently predicted that during the upcoming 2021-22 biennium, state revenues will fall $1.5 billion short of estimates used to craft the state’s budget.

“We are in uncharted territory,” Gordon said in his news release. “We have just experienced the largest loss of income in our history just four years after our second largest loss of income.”

Gordon was expected to address his news release in more detail during a news conference Thursday.

Gordon said it would be impossible to make up for the revenue loss entirely through reductions in state programs and employment.

“But even if every state employee was let go, or if we closed the prisons, eliminated all money going to the courts and stopped funding persons with disabilities, we would still run out of funds at the end of the biennium,” he said.

Gordon said after proposing programs that could be cut, agency heads will be asked to build flexible approaches that could be adjusted to updated revenue forecasts as they are provided later in the year.

“To be sure, the data that we used to model these revenue shortfalls are preliminary, and therefore still a bit unclear, but there can be no doubt we will see a continuing steep decline,” the Governor said. “In any event, our approach to the significant cuts we will have to make must be done strategically, with purpose, and in a manner that assures Wyoming can recover rapidly.”

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Cheyenne Refinery To Shift To Renewable Diesel, Cut 200 Workers

in Business/Economy/Energy/Jobs/News
4710

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By Jim Angell, Cowboy State Daily

HollyFrontier’s Cheyenne Refinery will shift from refining petroleum to producing a diesel fuel made out of soybean oil, the company announced Monday.

HollyFrontier announced in a news release that the conversion from petroleum refining will take 12 to 18 months and by the time the work is completed, about 200 workers will have been released.

The reduction in the refinery’s workforce will occur over a period of time, said Liberty Swift, manager of corporate communications for the company.

“Everyone’s learning today what the plan is so no one would be taken by surprise,” she said. “We’re working with everybody to try to assist them through this process.”

The refinery on the south side of Cheyenne has been processing petroleum for 86 years, according to Mike Jennings, HollyFrontier’s president and chief executive officer.

But Jennings said given the crash in oil prices caused by both oil price wars and the coronavirus, the company did not believe petroleum refining was a sustainable business.

In addition, the company was looking at high operating and maintenance costs related to the refinery over the next three to five years, he said.

Swift said there is a growing demand for diesel fuel made from renewable resources, particularly in California, but also in Colorado.

The Cheyenne refinery was well-suited for the conversion because some of the equipment already in place can be used to produce the renewable diesel, she added.

Any equipment not used in the production of renewable diesel will be idled, Swift said.

The conversion process is expected to cost about $125 million to $175 million, the company said.

When the work is finished, about 80 employees will remain at the refinery.

The company will work where possible to put employees removed from the refinery to work at other HollyFrontier plants, Swift said.

She added the company wants to continue working with Cheyenne as it has in the past.

“We want to continue to be in the Cheyenne community and want to continue to be a strong community partner,” she said. “This is a way we can stay in the community.”

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Construction, Infrastructure Projects Could Boost Wyoming’s Faltering Economy

in Coronavirus/Economy/News
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By Ike Fredregill, Cowboy State Daily

Facing the potential economic crisis of the century, Wyoming legislators could spend some federal relief funding on economic development projects to boost post-pandemic employment.  

During the Legislature’s special session on May 15 and 16, legislators laid out four priorities for spending $1.25 billion in federal aid provided by the CARES Act before its “use it or lose it” deadline on Dec. 30, Sen. Cale Case, R-Lander, said.

While the legislators’ first two priorities — COVID-19 emergency response and relief aid — deal specifically with the pandemic’s impacts on Wyoming businesses, residents and governments, the third priority — economic development projects — was created as a catchall that could help the economy get back on its feet, Case explained.

The fourth priority — replacement of lost revenue for public entities — might not capitalize on CARES Act funding, which cannot be used as revenue for the state’s general fund. But by setting the task as a priority, the Legislature has laid the groundwork for using CARES funding “to the extent allowable” and future stimulus funds for the stated purpose.

Economic development might seem like an odd choice for spending the federal money, but University of Wyoming Economist Rob Godby said the category is a historical staple for rebooting struggling economies.

“Construction is a tried and true way of recovering an economy that’s been impacted by a deep recession,” Godby explained. “It’s a well recognized initiative all the way back the Great Depression and the New Deal.”

New businesses could open to accommodate the influx of temporary workers drawn to new construction projects, providing jobs across several sectors in a community.

While the construction jobs are typically temporary, they can be a Band-Aid for the growing unemployment rate while giving recovering businesses enough time to rebuild the demand for a permanent labor force.

“Putting people to work on construction or expanding infrastructure is good for the present, because it creates jobs,” Godby said. “And it’s good for the future, because once that infrastructure is in place, it creates additional benefits and increased productivity.”

Broadband infrastructure stood out as one of the legislators’ suggested economic development projects, and Case said good broadband is needed now more than ever.

“If anything has become common in the last few months, it’s the use of things like Zoom for meetings and telemedicine to bridge the social distancing gap,” he explained. “A lot of people are thinking broadband is going to get a lot of these funds.”

In 2018, former Gov. Matt Mead’s ENDOW initiative identified broadband infrastructure as a key component to improving Wyoming’s economy. In 2019, the Wyoming Broadband Advisory Council determined the state’s focus should be on broadband infrastructure expansion, rather than improving the infrastructure already in place.

In addition to creating jobs, Case said economic development projects could help the state spend the federal aid before the deadline.

“The legislator left a lot money on the table for the governor in case they don’t come back and give him more direction,” he said.

During the special session, legislators did not set a spending limit for economic development in Senate Enrolled Act No. 001, which designates the emergency funding priorities. However, the bill does leave room for Legislature to give Gov. Mark Gordon future guidance about how the money should be spent.

Given economic development’s low ranking on the priority list, Case said new projects are only an option at this point.  

“It’s possible that by the time we get through all the applications for the different types of relief,” Case said, “there’s no money left on the table for economic development projects.”

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Wyoming Revenue Decline To Hit Between $1.5 Billion to $1.8 Billion

in Coronavirus/Economy/News
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By Jim Angell, Cowboy State Daily

Income to pay for the state’s next budget, including education, will probably fall almost $1.5 billion short of projections used to create that budget, but could dip as far as $1.8 billion below earlier estimates, according to a state report released Tuesday.

The Consensus Revenue Estimating Group, in a special report, said between the economic slump created by the coronavirus pandemic and an oil price war between Russia and Saudi Arabia, Wyoming’s revenues will be reduced significantly and will not bounce back quickly.

“Under all scenarios, state revenues … are materially lower,” said the report. “A forecast … eventually illustrates a modest rebound; however, none of the funds/accounts recover to pre-COVID-19 levels … by the end of the forecast period.”

The CREG is made up of economists from different state agencies who look at the impact of statewide, national and global developments on sources of revenue for the state.

The CREG’s reports provide the basis for legislators as they work to set up the state’s budgets, which run in two-year cycles. The next budget for the state begins on July 1 and ends on June 30 of 2022. It was approved by the Legislature in March using a projection issued by the CREG in January.

The report said money for the state’s general fund — its main bank account — and budget reserve account would probably drop by almost $1.1 billion during the biennium from January projections. The report said the decline could range from $783.6 million to almost $1.4 billion, depending on conditions.

Meanwhile, income for the state’s School Foundation Program and School Capital Construction Account, will fall by from $291 million to $472 million below estimates, the report said. CREG said the decline will most likely be around $394 million.

The report said the CREG was forced to make broader estimates than it usually does because of the uncertainties its members faced in making projections.

“Traditional models and methods employed by CREG in prior reports are unlikely to carry the previous levels of accuracy due to the unprecedented nature of current events,” the report said. “Perhaps this forecast is best described as a reasoned assessment.”

The report predicted a drop of more than $536 million in mineral severance taxes from January estimates, a decline of more than 44%.Sales and use tax revenues, meanwhile, were expected to fall by more than $310 million from earlier projections during the biennium, a decline of more than 27%.

The report was delivered Tuesday to members of the Legislature’s Revenue Committee.

Committee member Sen. Ogden Driskill, R-Devils Tower, said in a Facebook posting the decline will force the Legislature to make difficult choices.

“Tough decisions ahead for the state,” he wrote.

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Covid-19 Poll: Wyomingites Very Concerned About Economy, Fewer Concerned About Spread Of Virus

in Coronavirus/Economy/News
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By Jim Angell, Cowboy State Daily

Almost all of those questioned in a University of Wyoming survey are concerned about the impact of coronavirus on the national economy and a majority are concerned about its impact on their personal finances.

The UW Survey and Analysis Center’s latest coronavirus-related survey showed that 72.9% of those questioned are very concerned about the impact of the pandemic on the nation’s economy and 24.1% are somewhat concerned.

At the same time, 70.5% of the 473 Wyoming residents contacted in the random telephone survey on May 11 said they were either very concerned or somewhat concerned about the outbreak’s impact on their personal finances. Almost 22% said they were not too concerned.

The survey, which has a margin of error of plus or minus 4.5%, is the fourth conducted since the end of March aimed specifically at collecting information on people’s attitudes toward the coronavirus.

The survey also found that the number of people worried about the spread of COVID-19 has dropped since March.

The number of people who said they were very, fairly or somewhat anxious about the spread dropped from 82.9% to 67.9%.

At the same time, the percentage of people who said they were “not at all” concerned about the spread of illness increased to 32.1% in May compared to 17.2% in March.

Also dropping was the number of people concerned that they or someone in their family might get coronavirus.

In March, more than 70% of those questioned were very or somewhat worried about the prospect, a number that dropped to 58.1% in May. Meanwhile, the number of people who said they are not worried at all increased from 6.4% in March to 12.9% on May 11.

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