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Legislator on Wyoming’s Economy: “Even Optimistic Outlook Has Terrible Impacts”

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

Wyoming’s savings and federal relief funding combined might not be enough to save the state from economic damage left in the wake of COVID-19, state legislators said.

fiscal analysis sent to legislators on April 10 by the Legislative Service Office (LSO), the agency tasked with providing administrative services for the Legislature, predicted the novel coronavirus would take a heavy toll on state revenue.

“It is showing really huge impacts,” said Sen. Cale Case, R-Lander. “Even the optimistic outlook has terrible impacts.”

The analysis offered three scenarios — optimistic, intermediate and pessimistic — in which the state’s revenue could fall from current projections by $555.8 million to almost $2.8 billion by the end of fiscal 2022.

Case, an economist and Senate Revenue Committee chairman, said the decline is driven by the pandemic, but an “oil war” between Russia and Saudi Arabia also caused significant damage to revenue projections.

“When we had forecasts late last fall, the saving grace in those predictions was oil offsetting the loss of revenue,” Case said. “This new analysis is saying this could be worse than our worst year since 1980.”

In the case of the analysis’ pessimistic outlook, Wyoming’s rainy day fund, the Legislative Stabilization Reserve Account, of $1.6 billion wouldn’t keep the state afloat for more than six months, Case said.

“At the very basic level, we don’t have enough revenues to run state government,” he added. “We don’t even have enough revenues to run state government even if we cut it by a lot, and I mean a lot.”

While the analysis admits the projections are “informed guesses,” Case and Senate Appropriations Committee Chairman Sen. Eli Bebout, R-Riverton, said they felt it was accurate.


“I’ve got a lot of confidence in our LSO staff,” Bebout said. “I think the three scenarios (the LSO) laid out are fairly realistic.”

The optimistic viewpoint indicates Wyoming might only lose about $555.8 million in revenue if businesses reopen immediately and sales return to normal, but Bebout said the intermediate outlook — a loss of about $1.76 billion over the next three years — was far more likely

“I don’t think we’ll ever have business as usual quite like it was before this happened,” he explained. “I think we’ll see some long-term effects, but we’re going to figure it out.”
Part of the solution could be $1.25 billion in federal aid as a result of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which Bebout said Wyoming started receiving Friday.

But, the relief cannot be spent as a direct replacement of state revenue.
“There’s all sorts of strings tied to that money,” Bebout said. “We don’t know what they are for sure yet.”

A special session could be needed to determine how the money could be used and would be the first step of Bebout’s three-pronged approach to the pandemic’s economic impacts. 

His second step would be to look at the budget Wyoming Legislature approved a few weeks ago to determine if the state’s proposed spending is still feasible in a post-pandemic economy.

“Lastly, we need to try get business back to normal as best we can, continuing our conservative fiscal responsibility and try not to get in debt,” Bebout said. “We can’t cut our way into this issue, but we sure as heck can’t spend our way into it, either.”

Following a Wyoming Management Council meeting Thursday, Case said legislative special sessions could be on the horizon in the next couple months.

“(The council) approved the interim topics that still need to be addressed and were important to Wyoming even before COVID-19 hit,” he said. “And they also agreed to work on some preliminary bills for introduction in a special session, regarding COVID-19.”

Bebout said the council meeting reinforced the need to not only address the pandemic challenges, but also the issues at hand prior to COVID-19.

“We’re going to continue with our normal work load — that’s really important.,” he explained. 

“Second of all is a willingness by the Management Council to work with the governor to deal with these issues that are top of the list and do it together.”

Coronavirus Impact: Wyoming Revenues to Drop Between $550 Million – $2.8 Billion

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

Revenues needed to run the state will decline dramatically in the next several years from projections made before the coronavirus was detected in Wyoming, according to an analysis by a state agency.

The analysis by the Legislative Service Office, the agency tasked with providing administrative services for the Legislature, found that the state’s revenue could fall from current projections by $555.8 million to almost $2.8 billion by the end of fiscal 2022.

The Legislature, during its recent budget session, based its budget for the fiscal 2021-22 biennium on projections made by the Consensus Revenue Estimating Group, a group of fiscal analysts from different state agencies who meet several times a year to provide their estimate on how much money the state will have to work with.

However, the last such projection was provided in January, before the coronavirus shut down much of the economy.

As a result, the LSO, in response to requests for information, prepared its own analysis showing three possible scenarios for the state’s revenues from April of this year through the end of the coming fiscal biennium in June of 2022.

“In light of the last month’s unprecedented economic developments, the January 2020 Consensus Revenue Estimating Group … forecast is no longer a reasonable projection of state revenues in the near-term,” the analysis said. “Wyoming’s economic outlook has changed significantly.”

The analysis provides three scenarios based on different assumptions: “optimistic,” projecting a shorter economic downturn and quicker recovery; “intermediate,” based on actual mineral futures prices, economic disruption through the summer and a modest recovery over the next year, and “pessimistic,” based on a drawn-out crisis with an extended recovery.

The LSO admitted the scenarios are “informed guesses.”

However, it also noted that in addition to the coronavirus, Wyoming has already been hit hard by an oil price war between Saudi Arabia and Russia that has left oil prices depressed.

Under the optimistic scenario, income through the end of fiscal 2022 will decline by $555.8 million from January projections. The intermediate scenario predicts a drop of $1.7 billion and the pessimistic predicts a decline of almost $2.8 billion.

The impact to the state’s main checking account, its “General Fund,” could range from $254.6 million to $1.4 billion, the analysis said.

Funding for the School Foundation Program Account and School Capital Construction Account might fall by $136 million to $526 million, the analysis said.

The state’s oil tax income will be the revenue source hardest hit compared to earlier projections, the analysis said, dropping by $494 million to just over $1 billion between now and the end of fiscal 2022.

Coal tax income will also decline by $203 million to $437 million, the analysis said.

Sales and use taxes will drop by $147 million to $869 million.

The analysis should be seen only as a starting point for discussions as officials try to determine how to react to the coronavirus pandemic, said Don Richards, the LSO’s budget and fiscal administrator.

“It really is just a platform for discussion,” he said.

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Cheyenne Frontier Days CEO: No Plans for Cancellation Yet

in News/Coronavirus/Economy
Photo courtesy: Cheyenne Frontier Days
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By Ellen Fike, Cowboy State Daily

There will likely be no decision on canceling Cheyenne Frontier Days until at least late May or early June, CEO Tom Hirsig said Monday.

Hirsig, in a telephone interview with Cowboy State Daily, said rodeo officials are keeping track of conditions, but are still planning to proceed with the 10-day event.

“We’re still moving forward with all aspects of the show,” Hirsig said. “We’re like everyone else, sitting here waiting for clarification on the future. There’s just not enough information on how long this will last.”

“If the biggest outdoor rodeo in the world were to be canceled, it would be only in conjunction with city, county and state orders,” Hirsig said. “It’s going to take a lot to bring the ‘Daddy of ’em All’ down.”

In a fireside chat hosted by Cheyenne Mayor Marian Orr on Friday evening, she noted that the coronavirus pandemic has already impacted the rodeo, which is scheduled for July 17 through 26.

Orr said she hoped the event wouldn’t be canceled.

“It would be really difficult for our community,” she said. “Economically, yeah, but it’s our spirit that it would hurt. Cheyenne Frontier Days has continued on through wars and depressions. For (the virus) to be the reason we didn’t have it in 125 years would hurt our soul.”

Hirsig joked that he was one of the people waiting to see what would happen with the summer event, but clarified that no ticket sales have been suspended and there are no plans to do so.

The Frontier Days ticketing offices are closed to the public, but people can still purchase rodeo or night show passes over the phone or online, he said.

Hirsig added that ticket sales haven’t been affected much by the pandemic and very few people have called to inquire about rescheduling, much to his surprise and relief.

CFD officials are meeting weekly to discuss event plans, Hirsig said. The virus has impacted the volunteer meetings, but Hirsig said he has faith in the dedicated crew that keeps Frontier Days running every year.

Over the last few years, the CFD officials’ biggest concerns have been related to violence and trying to beef up security. This year, they may have to reorganize their priorities, Hirsig said.

“I’m not sure how things will look in a post-virus world,” Hirsig said. “At an event like ours, you’d probably have to have twice as many hand sanitizers as there are now. We’d maybe have to disinfect the bleachers and the grandstands once or twice a day. I don’t know how things will look.”

Ultimately, Hirsig said he and other CFD officials will continue to follow the rodeo’s mission of providing a positive economic impact on the community, which he said runs from Cheyenne through the state and even into the Front Range.

“We have an economic impact of $26 million in our community alone and $40 million for the state,” Hirsig said. “We want to do everything in our power to safely fulfill that mission. We’re dedicated to doing that until it’s decided that it’s not safe to do so.”

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Wyoming Unemployment Remains Steady At 3.7 Percent

in News/Economy
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Wyoming’s unemployment rate remained steady in January at 3.7 percent, the same rate seen in December, according to the state Department of Workforce Services.

The department’s Research and Planning Section, in its regular report on unemployment, reported that the rate was slightly higher than the January 2019 rate of 3.5 percent, but almost equal to the national average of 3.6 percent.

The state’s highest January unemployment rate of 5.9 percent was found in Sublette County, followed by Fremont County at 5.6 percent and Big Horn and Sweetwater counties at 5.4 percent. Teton County’s unemployment rate fell from 2.9 percent to 2.7 percent.

The biggest increases in unemployment from December to January were seen in Big Horn County, which grew from 3.7 percent to 5.4 percent, Washakie County, from 3.6 percent to 4.6 percent, and Sheridan County, which grew from 3.4 percent to 4.3 percent.

“Colder weather and the end of the holiday shopping season often bring seasonal job losses in January in many sectors, including construction, retail trade, government and professional and business services,” the report said.

In December, Wyoming’s unemployment rate was higher than in most of the surrounding states, said David Bullard, the section’s senior economist. He added Wyoming has had a higher unemployment rate than surrounding states since about 2018.

“Some neighboring states have been growing more quickly than we have,” he said.

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