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Gordon: Spending Cuts Of $250 Million Just The Beginning For Wyoming

in Economy/Mark Gordon/News
5322

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By Jim Angell, Cowboy State Daily

Cuts in state spending beyond the $250 million reduction already authorized by Gov. Mark Gordon will be needed going forward, he said Wednesday.

Gordon, speaking during a news conference, said those reductions will involve state employee layoffs and furloughs.

“I am the first governor in quite a while who will actually have to lay off people,” he said. “I know how painful that is. I don’t particularly like it and I particularly don’t like the fact we won’t be able to do the things people have come to count on.”

The state’s top fiscal experts are predicting that between declines in the state’s mineral industries and the economic difficulties created by the coronavirus pandemic, state revenue will fall $1.5 billion short of what had been projected when the Legislature prepared the state budget for the 2021-2022 biennium, which began July 1.

Gordon said the declines in revenue amount to one-third of the money needed to run the state and since he lacks the authority to raise revenue, his only option is to cut spending.

“Simply put, we don’t have enough income,” he said. “We lost roughly a third of what we need to pay our bills. As governor, it is my constitutional duty to balance that budget.”

The cuts announced Monday, about 10% of the state’s total spending, amounted to about one-third of the spending reduction needed, Gordon said, so he ask agencies to look at further spending reductions.He added that the cuts will affect every Wyoming citizen.

“There is no part of the government that isn’t feeling the pain of that 10%,” he said. “There’s no part of the Wyoming citizenry that won’t feel something from this 10%.”

In addition to spending cuts and layoffs, the state will furlough for one day a month some staff members with higher salaries, Gordon said, those making about $65,000 a year.

The governor also took the opportunity to address critics questioning why the state is looking at the possible purchase of 1 million acres of land in southern Wyoming from Occidental Petroleum in the face of falling state income.

Gordon noted the money that would be used for the purchase, if approved by state officials, would come from state investment funds, not money used to pay the state’s bills.

“We’re not using any of the money that would pay for any of these programs, any of these salaries or any support for cities, towns or counties,” he said. “These monies are fully within our investment portfolio.”

If the purchase is approved, it will only be because the land will generate returns for the state, he added.

“We’re not taking any crazy bets and we’re not going out on any limb,” he said. “We’re making sure Wyoming will have the absolute best returns for the most safe investments it can have.”

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More Than $80 Million Distributed From State COVID Aid Program

in Coronavirus/Economy/News
5261

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By Jim Angell, Cowboy State Daily

More than 900 Wyoming businesses received more than $25 million in one day from the state’s Business Interruption Stipend program, according to state figures.

Figures on the Wyoming transparency page showed that on Wednesday, 915 companies received $25.3 million, bringing the total distributed under the program since it launched in June to almost $80.5 million.

The total number of Wyoming businesses to receive assistance under the program so far is 3,191, with applications still under review from about another 1,000 businesses. The deadline for submitting applications was July 2.

The Business Interruption Stipend program was one of three approved by the Legislature this year to help Wyoming businesses hurt by the coronavirus pandemic and resulting business slowdown. Funding for the programs comes from $1.25 billion in federal coronavirus assistance funds sent to the state.

The Business Interruption Stipend program is designed specifically for businesses employing 50 or fewer people.

The maximum grant available under the program is $50,000 and as of Wednesday, 831 businesses had received the maximum, many of them restaurants, bars and hotels.

The state’s other two relief programs are scheduled to start later this month.

One program, the Coronavirus Business Relief Stipend, will provide up to $300,000 for companies that employ fewer than 100 people that were forced to shut down or curtail operations because of state health orders issued to slow the spread of coronavirus.

The other, The Coronavirus Mitigation Fund, is designed to compensate businesses for expenses they faced directly related to the coronavirus, such as the purchase of cleaning products, personal protective equipment and the cost of hiring new employees to comply with public health orders.

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Gordon Says State Will Cut Staff

in Coronavirus/Economy/Mark Gordon/News
5206

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By Jim Angell, Cowboy State Daily

Gov. Mark Gordon and his state agency heads will begin their work this week to cut the state’s biennium budget to deal with projected revenue shortfalls of $1.5 billion, he said Wednesday.

And the governor warned residents during a news conference that they will have to expect both program and personnel reductions.

“Some of the things that are on the (list for cuts) will be funding for things like mental health, sex offender programs, children, elder care … travel out-of-state for some of our agencies,” he said. “These are some of the many very difficult choices we will have to make and there will be reductions in force. None of that is good.”

Wyoming’s Legislature approved a budget for the 2021-22 biennium, which began on July 1, during a budget session that ended in March.

Shortly after, a collapse in mineral prices led state officials to predict that tax revenues for the biennium would fall $1.5 billion short of earlier projections, requiring budget cuts.

Gordon asked all of his agency heads to submit ideas for reducing their budgets by 20% and said Wednesday he has asked the officials to propose additional cuts of 10%.

“The cuts we’ve talked about here are getting close to the bone,” he said. “In some cases we really are talking about the bone. We will talk about some very precious programs and some very valuable people. I don’t look forward to any of this.”

The state’s agencies will work to improve the efficiency with which they provide services, Gordon said, to avoid reducing those services more than necessary.

In the upcoming election, Gordon said, candidates for the Legislature need to understand the challenges the state faces so they can be prepared to act accordingly during the Legislature’s general session in 2021.

“This election is essential to make sure we have quality candidates who understand the challenges and choices we have to make … in a way we can emerge from this, as I know we can, successfully and stronger,” he said. “Our session coming up in January will be one of the most important sessions that this state has ever seen.”

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Wyoming Economy: Shortest But Most Severe Recession in History

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

Early in what some economists called the most severe economic recession in history, Wyoming’s economy posted mixed results.

A report from the Economic Analysis Division of the state Department of Administration and Information said that while Wyoming personal income and home prices were up in the first quarter of 2020 over 2019 figures, employment declined, along with taxable sales, tourism and interest revenue.

The quarterly report on economic conditions nationally and in Wyoming said economists believe that the country’s recession sparked by the coronavirus pandemic may be over with the reopening of businesses across the nation.

“The quick reopening of businesses across the country catalyzed the turnaround and the three-month downturn — March through May — will be the shortest in recession-dating history, but it will be among the most severe,” the report said. “Real (gross domestic product) is expected to decline by more than 12% peak to trough between the fourth quarter of 2019 and the second quarter of 2020, approximately three times the loss experienced during the Great Recession.”

The report on conditions in Wyoming during the first quarter of the year — January through March — said unemployment had already started to rise before the illness led to restrictions on businesses in March.

In the first quarter, employment declined slightly from the first quarter of 2019, by 1,090 jobs, 0.4%, while the unemployment rate moved to 3.8%, slightly higher than the national average.

“Job declines occurred in about half of industrial sectors where … mining (including oil and gas extraction) lost the largest number of jobs, mainly to do the reduced drilling activities because of declining oil and natural gas prices,” the report said.

Also posting a decline in the first quarter was taxable sales, which fell by 5.7% from 2019 to total $4.2 billion.

The report once again pointed to falling numbers in the mining sector as largely responsible for the overall decline, with sales of related equipment and supplies dropping by 27.2% from 2019.

Most of the state’s counties, 13, saw an increase in taxable sales, with Niobrara County more than doubling its sales compared to the first quarter of 2019 — 162.7%.

However, Sublette, Johnson and Sweetwater county sales declined by more than 30% from the previous year, “mostly reflecting a slowdown in conventional natural gas exploration.”

In tourism, the report said the number of visits to Yellowstone National Park in the first quarter dropped by 5.2% from 2019 and visits to Grand Teton National Park declined by 4.9%.

“The complete closure of these two national parks in late March may be a factor for the visitation change,” the report said.

Statewide lodging sales also declined by 9.9% from the first quarter of 2019, it said.

Agriculture prices fell slightly in the first quarter of 2020 from 2019, the report said.

Investment income to the state from its Permanent Mineral Trust Fund totaled $55.3 million in the first quarter of 2020, a 26.4% drop from the first quarter of 2019.

However, there were several bright spots in the first quarter, the report said.

Personal income grew by 2.8% in the first quarter over 2019 figures. However, the increase was slightly below the national average increase of 3.3%.

In addition, the price of a single-family home increased by 9.9% over the year, the fastest pace since the third quarter of 2007.

In addition, mortgage delinquency and foreclosure rates were lower than the rates seen in 2019.

However, the number of permits issued to build new homes fell by 3.5% from last year.

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Almost 2,300 Businesses Get $73 Million In State Assistance

in Coronavirus/Economy/News
5147

By Jim Angell, Cowboy State Daily

Almost 2,300 Wyoming businesses have collected more than $73 million in aid funds under a program designed to help companies recover from the coronavirus pandemic, according to state figures.

Figures posted on the Wyoming Transparency Platform show that as of Thursday, just over $73 million had been sent to 2,277 companies under the Business Interruption Stipend program.

And more assistance is on the way.

While the program originally set aside $50 million to provide grants of up to $50,000 for businesses, Gov. Mark Gordon announced Monday he would make another $50 million available for the program.

“This global pandemic continues to have significant impacts on the economy and on the lives of people in Wyoming,” Gordon said in a news release. “These grants keep people employed and help small business owners stay resilient while respecting the health orders that protect lives.”

The Wyoming Business Council, which manages the program, said in a news release Friday that by the application deadline of midnight Thursday, 4,211 applications for a total of $104.6 million had been received.

The WBC said it would continue to process applications for the program as quickly as possible.

The Business Interruption Stipend program was one of three approved by the Legislature to help Wyoming businesses affected by the pandemic. Funding for the programs comes from $1.25 billion in federal coronavirus assistance funds sent to the state.

The Business Interruption Stipend program is designed specifically for businesses employing 50 or fewer people.

Grants range from $1,000 to $50,000 and as of Thursday, 547 businesses had received the maximum grant.

Many of the companies receiving the maximum grant are involved in the hospitality industry — such as hotels and restaurants — and the entertainment business. However, requests came from other industries, such as building contractors and communications-marketing companies.

The busiest day of the program so far has been June 25, when 440 businesses received $11 million.

The state’s other two relief programs are scheduled to start later this month.

One program, the Coronavirus Business Relief Stipend, will provide up to $300,000 for companies that employ fewer than 100 people that were forced to shut down or curtail operations because of state health orders issued to slow the spread of coronavirus.

The other, The Coronavirus Mitigation Fund, is designed to compensate businesses for expenses they faced directly related to the coronavirus, such as the purchase of cleaning products, personal protective equipment and the cost of hiring new employees to comply with public health orders.

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

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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
5005

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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
4769

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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
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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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