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Gordon: State Does Not Have The Rainy Day Funds To Fix Revenue Crisis

in Economy/News
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In a somber press conference on Wednesday, Gov. Mark Gordon sought to clear up the misperception that the state has enough money saved up to fix the state’s revenue crisis.

The governor said the notion that the state has large sums of money “stuffed away in coffee cans” isn’t true and the use of emergency funds won’t solve the problem.

“Sure we can spend the entire rainy day account down over the next two years but then what?,” Gordon said.

“Many people may be thinking we’ve got all this money in permanent funds and other accounts,” he said. “We’ve got to get [the budget picture] down to a very simple approach so people understand there just isn’t that much money.”

To that end, he said the state needs to plan five years out instead of the biennial process so “we know in five years we still have a state we can run.”

“We are approaching this cliff and we don’t have a way to affect a slowdown or a pause,” he said of Wyoming’s education funding mechanism.

Gordon said he hoped new legislators — many of whom ran on anti-tax pledges during the recent primary campaign — take time to learn about the budget and that government then clearly communicate to the public.

 “The people of Wyoming need to be assured that what they see in the budget documents is exactly what the state has,” he said.

Gordon said he hoped the public understands the severity of the problem before the state runs completely out of money.

“I know there are several people in the Legislature who feel this (running out of money) has to happen before anyone looks at this,” he said. “But the state has been through this a time or two before.”

He said he spoke to both former Gov. Mike Sullivan and Gov. Jim Geringer about the budget crisis acknowledging that each of them faced similar challenges.

An issue is trust, he said. 

“I do think people in Wyoming have got to be satisfied that we are out of money,” he said.

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Reason For Optimism In Wyoming’s Future, Gordon Says

in Economy/Mark Gordon/News
5996

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By Jim Angell, Cowboy State Daily

Despite the economic problems that have forced Wyoming to make deep budget cuts to its government agencies, there is reason for optimism in the state’s future, Gov. Mark Gordon said Wednesday.

Gordon, speaking during a news conference, said the state is actually in good condition in several areas, including its low coronavirus infection and unemployment rate, and has been helped by actions that have been taken to provide assistance to portions of the state’s economy.

“This is a challenging time, but I do believe there are reasons for optimism,” he said. “There are bright days ahead because of the sacrifices we are making. Those are having positive effects and those positive effects will have a ripple into our economy.”

Gordon pointed specifically to Wyoming’s low rate of positive results on coronavirus tests, which are averaging 2.45%, and to the state’s unemployment rate of 7.1%, well below the national average of 10.5%.

The state has directed more than $300 million in federal coronavirus relief funds to the state’s small businesses and has worked to issue contracts for the cleanup and reclamation of old coal mines and oil wells, he said, to help offset losses seen in the state’s coal, oil and natural gas industries.

“This year we are spending more on more (reclamation) projects,” he said. “It is anticipated that we will spend more than $200 million this year.”

Gordon also noted that Wyoming was one of the few states to allow its state and county fairs to proceed.

Such forward steps will be important as the state continues its work to climb out of the economic problems created by the coronavirus pandemic and energy industry slump, he said.

“Right now Wyoming feels pretty good,” he said. “We’re doing what Wyoming does. Let’s just be mindful about it. Let’s make sure we have a successful fall. That’s what’s going to be important for us to get out of this economic slump.”

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Gordon: Budget Cuts Will Be Devastating And Just Tip Of The Iceberg

in Economy/Mark Gordon/News
5987

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By Ellen Fike, Cowboy State Daily

The first round of Wyoming government budget cuts as proposed by Gov. Mark Gordon has been finalized, totaling more than $250 million, with an additional $80 million in cuts to maintenance of state buildings.

The 10% cuts to state agencies, boards and commissions will have significant effects on Wyomingites and their communities because they will affect important services that people depend on and will reduce general fund dollars that enter the private sector, Gordon said Wednesday as he announced the cut.

Gordon said the state’s largest five agencies would see the largest cuts, totaling almost $200 million.

“These cuts that we have made are devastating, but necessary given the state’s fiscal picture,” Gordon said in a news release. “A third of our revenue has dried up since the beginning of the year. I am constitutionally required to balance the budget. Our state cannot deficit spend the way the Federal Government can. Just to manage this crisis, difficult decisions had to be made.”

The governor began his Wednesday press conference with remarks about the budget, detailing some of the cuts that have been made. He noted it’s taken about two months to decide on what would be best to cut in the first phase.

He also asked the Wyoming school districts to make voluntary 10% budget cuts, although he noted it would make for difficult decisions.

The Wyoming Department of Health, with the state’s largest budget, will see a 9% cut totaling approximately $90 million.

WDH programs facing cuts and elimination include those that serve senior citizens, disabled individuals and those with very low incomes, Gordon said.

Among the cuts planned are the phased elimination of the Wyoming Home Services program, an Aging Division program which provides services to individuals who are at risk of premature institutionalization; the elimination of some immunization funding for children; and a reduction in funding for early childhood developmental and educational programs. 

UW and the state’s community colleges had their budgets cut by 10% as well.

These cuts will mean reduced higher education options for Wyoming students, Gordon said. One program eliminated was Wyoming Works, an initiative the governor supported to help prepare adult students to enter the workforce. 

The Department of Family Services is eliminating vacant positions in the state office and field offices across the state, including at the Boys School in Worland and the Girls School in Sheridan.

Additionally, this means fewer people will be able to work on foster care and child protection Gordon said.

DFS cuts also mean the defunding of the Community Juvenile Services Boards, county-based diversion programs to prevent juvenile incarceration, and the burial program, which pays up to $500 to funeral homes for burial expenses for the indigent. 

The Department of Corrections will also see significant cuts to programs that keep the public safe. Parole agents will now be required to supervise additional offenders, and programs that help inmates re-enter Wyoming communities and not reoffend will see reductions in funding. 

The Department of Health, Corrections, Family Services, the University of Wyoming and the community colleges make up two-thirds of the state’s general fund budget. 

The governor is considering options for addressing the remaining $500 million shortfall.

State agencies have already developed proposals on further cuts to services, and the governor is working with legislators on other options, all of which require legislative action. 

On top of these cuts, Gordon has put furloughs in place for higher paid state employees and is consolidating human resources across the state government. 

“None of the cuts are easy, nor are they designed to highlight critical programs for political effect,” Gordon said. “These are the types of cuts we will continue to have to make to get our budget in balance. These hurt, and what comes next hurts more. I recognize the impact these cuts will have on Wyoming families and I am truly saddened that we had to make them.”

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Occidental Petroleum Skips Wyoming, Sells Land To Orion Mine

in Economy/Mark Gordon/News
5866

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By Ellen Fike, Cowboy State Daily

Occidental Petroleum ended weeks of anticipation Wednesday when the company announced that it would sell land grant assets in Wyoming, Colorado and Utah to Orion Mine Finance.

The transaction will amount to approximately $1.33 billion and is expected to close in the fourth quarter this year.

The purchase includes 4.5 million mineral acres and 1 million surface acres. In this transaction, Orion is acquiring mineral rights to the world’s largest known trona deposit.

Trona is a mineral used to make soda ash, the principal ingredient in baking soda, global glass manufacturing, pollution control systems, as well as other critical chemical applications.

Gov. Mark Gordon’s office announced last week that its bid for the Occidental land was on hold, as the company was in negotiations with another bidder whose name wasn’t announced at the time.

The governor and other members of the State Loan and Investment Board planned to use Wyoming’s Permanent Mineral Trust Funds for the purchase.

Gordon announced in a release Wednesday that he was disappointed about the outcome of the sale.

“I am disappointed that Wyoming was not the ultimate buyer of the Union Pacific Land Grant lands and minerals,” he said in a statement. “We worked hard to prepare a responsible, good faith bid, which we believe would have augmented Wyoming’s investment returns, bringing in more revenue to keep taxes in Wyoming low.

“Had Wyoming’s bid been accepted, the rate of return was expected to be in the range of 8% to 12%, depending on the assets and how quickly the economy recovers. This predicted rate of return is currently better than our current average rate of return.”

The purchase was expected to provide benefits to Wyoming citizens by making it easier to manage public lands in southwestern Wyoming and providing more and better public access for recreation and hunting on the land. It was also seen as a way to give Wyoming more flexibility to manage the land for multiple uses, including grazing and the development traditional and non-traditional energy resources.

“We felt the purchase would have been a good investment at the bid we submitted,” state Treasurer Curt Meier said in the release. “However, we believe our existing investment opportunities will also serve the needs of the state and its constituents. Exceeding our target bid was a risk we were not willing to take.”

According to the Wednesday release, Occidental will retain all cash flow from the currently producing oil and gas properties on the land, which are primarily cost-free royalties.

“This transaction significantly advances the progress against our $2 billion plus divestiture target for 2020,” Occidental President and CEO Vicki Hollub in a company news release. “We will retain our core oil and gas assets in the Rockies, including the prolific DJ Basin in Colorado and the highly prospective Powder River Basin in Wyoming.”

The acquired properties will be held under Sweetwater Royalties, a new base metals and industrial minerals royalty company, which will be managed by Orion.

“Acquiring high-quality producing royalties is a core component of our investment strategy and we are thrilled to be partnering with Occidental in this transaction,” Oskar Lewnowski, chief investment officer of Orion, said in the release. “This transaction offers significant royalty cash flow from the trona mines and has strong potential for mineral development.” He added, “As a firm we recognize the importance of US mineral and energy production and are pleased to be able to offer our support to the existing world-class operators and their associated communities.”

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Gordon Launches Wyoming CARES Funds Transparency Website

in Coronavirus/Economy/Mark Gordon/News
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By Ellen Fike, Cowboy State Daily

Gov. Mark Gordon has created a page on the “Wyoming Sense” state spending transparency website outlining how the state is using federal dollars awarded through federal coronavirus relief.

As of Thursday, Gordon has allocated more than $710 million of the $1.25 billion in federal funds Wyoming was provided by Congress to address the impacts of the coronavirus pandemic.

During a special legislative session in May, the Wyoming Legislature provided guidelines as to how that money should be spent, splitting the funds into three disbursements.

The first amounted to $450 million and was made available for allocation on May 25.

The second amounted to $400 million and was made available for allocation on July 15.

The third will amount to another $400 million and won’t become eligible for allocation until Sept. 15.

The CARES Act spending page breaks down spending into nine categories:

  • Economic/business relief ($327.3 million);
  • Education resilience ($110.5 million);
  • Broadband and communications infrastructure ($100 million);
  • Testing and contact tracing ($60 million);
  • Unemployment and Workers Compensation ($42.2 million);
  • Local governments ($35.9 million);
  • Eviction prevention and support ($15 million);
  • State agencies’ COVID response ($12.2 million);
  • Judicial and legislative branches ($7 million).

The page, https://www.wyomingsense.gov/cares-act, includes additional details on each category, along with helpful links and additional resources. It will be updated regularly as additional funds are allocated. 

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Wyoming Banks Examine Ways To Ease Coin Shortage

in Economy/News
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By Wendy Corr, Cowboy State Daily

There seem to be a lot of shortages right now – shortage of work, shortage of workers, shortage of new cars in car lots, and even a shortage of coins.

Derek Moore with First Bank of Wyoming says the holdup is at the federal level.

“There’s limitations on what banks can actually order in terms of coin,” Moore said, adding that in his years in banking, he’s never come across this situation before. 

Garrett Growney with Pinnacle Bank explained that the problem has been brought on by the slowdown in the economy.

With the shortage of general commerce out there, a lot of coin has not made it back into the Federal Reserve system,” he says.

But Pinnacle Bank got creative. In order to assure an adequate supply for local businesses, it launched a contest to get people to bring in change that they may have been gathering at home – and the chance to win a $50 Visa gift card as the prize.

“There’s a demand for coin,” Growney said. “You’ll see some businesses around town not taking coin transactions. So we saw that coming and have run a promotion so that we could have coin, so that our customers can access it.”

According to the Federal Reserve’s website, the entity is working with the U.S. Mint and others in the industry on solutions, but the agency said that since mid-June, the Mint has been operating at full production capacity and is on track to mint 1.65 billion coins per month for the remainder of the year.

Growney says he doesn’t believe the change shortage is an indication that the government is moving to a “cashless society” as alleged by some conspiracy theorists.

“I know there are some conspiracy theories out there,” he said. “But my thought would be that this would be a very cumbersome way to go about it.”

And he pointed out that there’s still plenty of change circulating.“It’s still getting used,” he said, speaking of coins. “I’m not aware of any effort to do away with it.”

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Wyoming’s Budget Picture Improves Slightly, But Still Horrible

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By Jim Angell, Cowboy State Daily

Wyoming ended its last fiscal year in a little better condition than predicted earlier, according to a report issued Wednesday by the state’s leading financial officers.

But Gov. Mark Gordon urged Wyoming residents not to forget that the state still faces major shortfalls moving forward.

“Even if this report suggests moderate improvements … our state’s fiscal situation remains dire,” he said. “We must still exercise budget discipline to balance our budget.”

The report issued by Consensus Revenue Estimating Group was an update to one issued in May, when the panel of fiscal officers for various state agencies predicted a shortfall for the 2021-22 biennium of up to $1.5 billion.

The report also predicted the state would end the 2020 fiscal year on June 30 with $70 million less in its general fund, its main bank account, than originally believed because of declines in mineral tax income and sales and use tax income expected to accompany the coronavirus pandemic.

However, Wednesday’s update said income for the state ran slightly ahead of the May projections.

“The current pace of actual revenues … suggest that the May 2020 revenue forecasts are almost certain to be exceeded,” the report said.

For the state’s general fund, its main bank account, deposits were expected to total about $1.06 billion for the year ending June 30, about $50 million ahead of May’s projections.

The biggest part of that income is from sales and use taxes, which were expected to total $440.6 million in 2020, compared to forecasts of $418 million in May.

“Even during the darkest economic period of pandemic to date – the second quarter of 2020 – certain retail trade businesses such as building materials and garden supplies, grocery stores, sporting goods stores, warehouse club and super centers still demonstrated year-over-year growth in sales, offsetting some of the substantial declines in leisure and hospitality services,” the report said.

The state’s income from mineral taxes also exceeded estimates by about $33 million, the report said.

“Severance tax collections are above the May 2020 … projections, mainly attributed to the less drastic declines in both oil and natural gas production and quicker rebound of oil prices compared to levels projected by CREG,” it said.

However, Gordon, in a news release, said residents must remember that income for the state’s main bank accounts in 2020 still were 17.6% below the previous year’s totals.

“We are still well below what we budgeted for in January,” he said. “We will continue to face significant challenges going forward and will need to continue to make tough decisions about how we meet this budget shortfall.”

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Wyoming Budget Shortfall Improves to Negative $1.4 Billion

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

An update of a report projecting revenues for the state will show a slight improvement over earlier predictions, Gov. Mark Gordon said Tuesday.

However, Gordon, speaking during a news conference, said the numbers to be presented in the latest report from the Consensus Revenue Estimating Group will still paint a gloomy picture for the operation of state agencies.

“While it’s improved and while we’re very happy about the improvement, we also face significant challenges going forward,” he said. “Virtually every part of Wyoming is still going to have to look at what they’re going to have to do to meet this budget shortfall.

In May, the CREG, a group of state financial officers, estimated the state’s revenue for the coming two years would fall up to $1.5 billion short of what is needed to pay for the state’s biennium budget approved by the Legislature in March.

Gordon said the latest report, to be released in the next few days, will show that shortfall dropping by about $100 million.

“It’s not back to what we were hoping for, but it’s an improvement,” he said.

However, Gordon noted the shortfall is still large enough to equal or exceed the budget of entire state departments.

“If we eliminated all of (the Wyoming Department of Transportation), if there was no snowplowing, no road construction, no highway patrol, we wouldn’t have dented that,” he said. “If we cut our education general fund in half, we would barely touch that deficit that we’re having to deal with.”

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Wyoming’s First Digital Asset Bank To Open In October

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By Ellen Fike, Cowboy State Daily

Wyoming’s first bank for cryptocurrencies will likely open in October, months ahead of its originally scheduled opening of some time in 2021.

According to a news release from Avanti Financial Group Inc., founded by Wyoming native and blockchain advocate Caitlin Long, the group received formal notice from the Wyoming Division of Banking that Avanti’s application for a bank charter was accepted on July 15.

Avanti applied for a bank charter under Wyoming’s special-purpose depository institution law. It will likely do business under the name “Avanti Bank and Trust.”

Long and the Avanti team expect to be open for banking business as early as October.

“Our charter application incorporates truly novel ideas that have received detailed scrutiny from multiple regulators. It is the culmination of an enormous effort by Avanti’s fantastic team — several thousand hours of planning and work with regulators, and hundreds of pages of supporting policies, procedures and documentation,” Long said in the release. 

The company expects to serve as a “compliant bridge to the U.S. dollar payments system and a custodian of digital assets that can meet the strictest level of institutional custody standards.”

Avanti will be required to fully comply with all applicable laws and regulations, including federal “know your customer,” anti-money laundering and related laws and regulations. It will also comply with Wyoming’s SPDI and digital asset laws, which include requirements that fiat deposits be 100% reserved and that Avanti meet the strictest consumer protections in the digital asset industry.

Avanti also announced a new product to modernize U.S. dollar payments, called Avit, which is also nicknamed the “stablecoin disruptor.” Avit will only be able to be issued by a bank and will likely be treated as a cash equivalent.

A “stablecoin” is designed to ease volatility in the value of cryptocurrency. Its value can be pegged to the value of items such as paper money and commodities.

Avit is designed for use by institutional traders and corporate treasurers when they prefer a real-time payment settlement solution in dollars that doesn’t suffer from the delayed settlement and chargeback issues of traditional payment solutions or the legal, accounting and tax issues of “stablecoins.”

“I’m thrilled that the OCC yesterday followed Wyoming in allowing banks to provide custody for digital assets,” Long continued. “Wyoming has been developing its digital asset custody initiative for two years and already has a comprehensive framework and supervisory process in place, which does not exist elsewhere. The OCC and 49 other states do not yet have in place the comprehensive legal structure necessary for enabling digital asset custody without significant legal risk. They also do not have a roadmap for courts to adjudicate disputes involving digital assets and do not provide the certainty in bankruptcy that Wyoming provides for digital asset custodians. Its prudential standards make Wyoming the only jurisdiction in the U.S. where digital asset custody in a bank can truly be executed in a safe and sound manner.”

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Enzi Warns Congress Of Out Of Control Overspending

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

U.S. Sen. Mike Enzi called on Congress to be mindful of the nation’s debt and deficit as legislators tackle a new bill to address the coronavirus pandemic.

As Chairman of the Senate Budget Committee, the senator has had a close eye on the debt as the numbers have ticked upward in the last few months.

During his speech on the Senate floor Tuesday, Enzi noted this fiscal year, the country has already run up a deficit of $2.7 trillion, more than triple the size of the deficit the country ran at the same time last year.

“I recognize the unprecedented crisis presented by COVID-19 and I supported the necessary response,” Enzi said in his speech. “When this crisis abates, and it will, the federal government cannot afford to return to the status quo of unsustainable budgets and surging debt that jeopardizes the prosperity of future generations. We have to start a serious conversation about how we are going to pay our bills and put our finances on a more sustainable path. We can justify aggressive borrowing and spending as necessary during times of crisis, but that cannot be our default.”

The Congressional Budget Office projects the country is on track to spend $3.7 trillion more than we take in this year, without any new coronavirus legislation. By the end of the fiscal year, the country’s publicly held debt will exceed the size of the economy and by the end of 2021, debt as a percentage of the economy will be higher than it’s ever been in United States history.

“We are spending billions of dollars without so much as a discussion of how to pay for things while we keep digging the hole deeper for future generations,” Enzi said. “More legislation may be needed to combat the virus and help the economy, but we cannot use the crisis to justify opening the spending floodgates and borrowing from future generations to fund non-emergency priorities. We all owe it to them to do better, and I hope we start to do so soon.”

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