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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
5517

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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

in Economy/News
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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
5472

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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

in Economy/News
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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
5388

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

in Economy/Mark Gordon/News
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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
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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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