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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 News/Coronavirus/Economy
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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

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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

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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 News/Coronavirus/Economy
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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 News/Mark Gordon/Coronavirus/Economy
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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

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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 News/Coronavirus/Economy
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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

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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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