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Wyoming budget

State Budget Director: Wyoming Long-Term Economic Picture “Scary”

Published on in News/Wyoming budget
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By Jim Angell, Cowboy State Daily

While news that income for state government is running slightly ahead of projections is good, concerns still surround the long-term outlook for the state, according to a senior fiscal expert.

Kevin Hibbard, director of the state Budget Department, said a report issued last week showing that revenues for the state’s main bank accounts are running ahead of projections by about $73 million is good news for the short-term.

“The long term is a little bit scary,” he said.

A group of state fiscal experts known as the Consensus Revenue Estimating Group makes regular projections on how much revenue the state will receive to pay for its two-year budget. 

An update on the actual flow of income to the state issued Friday showed income for the state’s two main bank accounts, its “general fund” and “budget reserve account,” are running about $73 million ahead of the projections. All told, income for all the state’s major accounts is more than $100 million above estimates as of the end of March.

The higher revenue, along with cuts of more than $500 million made to the state’s current budget by Gov. Mark Gordon and the Legislature, should make it possible to finish the fiscal biennium in June 2022 without more cuts, Hibbard said.

“We can hold the budget that the Legislature has in place now,” he said.

However, he added that going forward, the state still has to deal with the impact of the halt of energy production on federal lands by the administration of President Joe Biden.

“We don’t know what the extent of that is going to be,” he said.

The moratorium will have more of an impact on Wyoming than other states such as North Dakota because those states have more leases on state land, he said.

He added drilling activity has declined significantly recently.

“In 2019 about this time, we had 25 rigs,” he said. “We’ve got seven now. We’re selling oil, but we’re not drilling as much.”

Hibbard also noted the Legislature put off any major maintenance work on state buildings to balance the current state budget. However, major maintenance expenses are projected to reach $129 million in the 2023-24 biennium, exceeding the revenue gains reported Friday.

“So if right now we are $100 million better off, we just put $129 million back in there,” he said.

Hibbard added the recent gains could be reversed given the fluctuating nature of Wyoming’s revenue.

“We are suggesting we collected more than anticipated, but that could change,” he said.

Hibbard is already working on the budget for the 2023-24 biennium, which begins July 1, 2022, and ends June 30, 2024.

The budget to be presented by Gordon in November and reviewed by the Legislature in early 2022 will depend heavily on the information provided by CREG in its October report.

“So we’ve got a couple more quarters to go through,” he said. “Hopefully revenue will continue to climb.”

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Wyoming Gov. Mark Gordon Says 2021 Budget Will Be A Tough One

Published on in Wyoming budget
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By Jim Angell, Cowboy State Daily

The proposed supplemental budget for state government to be reviewed by the Legislature when it convenes for its general session later this year will not be an easy one for the state, Gov. Mark Gordon said Tuesday.

Gordon, delivering a message to the Legislature during its one-day virtual session, noted he had already been forced to cut state spending before forwarding to legislators a difficult budget that proposed further spending cuts of $500 million.

“Make no mistake, this budget is a hard one,” he said in comments prepared for delivery to the Legislature. “I have already had to make deeper cuts than any other governor. We have tried to do our best to protect those who are vulnerable. But cuts of this magnitude are unavoidably painful.”

Gordon said his comments were not to be considered the “sate-of-the-state” address usually given on the first day of the Legislature’s session. He said he would deliver the “state-of-the-state” when the Legislature convenes later this year.

The supplemental budget is one of the main items to be addressed during the general session. A supplemental budget is one that is prepared halfway through the fiscal biennium to adjust spending, usually to provide extra funds for selected programs.

However, Gordon’s proposed supplemental budget would reduce the total spending for government operations for the fiscal 2021-22 biennium from $3.3 billion, the budget approved by the Legislature in 2020, to $2.4 billion.

Gordon compared the budget issues to Wyoming’s blizzard of 1949.

“We have to take action — smartly, fairly, and decisively,” he said.

Addressing the state’s financial situation will require more than simply recommending spending cuts, he added.

“Far more than a simple discussion between cuts or enhancements, Wyoming must look for ways to stabilize the booms and busts that come from a focused revenue source,” he said.

Gordon said he has asked the presidents of the state’s community colleges and the University of Wyoming to work together to develop ways to give workers the skills they need to succeed in an evolving economy.

“More than ever, our community colleges and our university must function together,” he said. “So that we can assure our existing as well as new industries and enterprises that there will be a world class, highly skilled, knowledgeable, nimble, entrepreneurial, and motivated workforce.”

Gordon said he would offer other ideas and strategies when the Legislature convenes for its session. Current plans call for virtual meetings by committees to review proposed legislation in mid- to late January, followed by an eight-day virtual session in late January and early February.

The body is to convene in person in early March, if health conditions allow, to begin its work on the budget and continue work on other issues.

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Gordon Suggests $500 Million In Budget Cuts In New Proposal

Published on in News/Mark Gordon/budget
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By Ellen Fike, Cowboy State Daily

Gov. Mark Gordon released his supplemental budget proposal on Monday, which includes additional cuts on top of the 10% he implemented in July.

This proposed budget reflects Gordon’s commitment to the Wyoming people that the state must live within its means in the face of declining revenues. 

Gordon’s proposed budget would cut state spending by more than $500 million and fulfills the constitutional requirement to present a balanced budget.

This proposed budget reflects total cuts to state agencies averaging 15%, but Gordon said he strived to preserve the health, safety and welfare of Wyoming citizens. 

“Our circumstances require that we make further reductions in order to meet our Constitutional obligation to balance Wyoming’s budget. These cuts to state agencies will result in the elimination of  both private and public sector jobs,” Gordon said in a release. “In approaching this supplemental budget, I have focused first on what is constitutionally mandated, thereby protecting the health, wellbeing and liberties of all Wyoming citizens.

“These are difficult cuts to make and they will affect people and communities,” he continued. “I regret that. While there were some efficiencies gained, I want to thank all our agencies for their hard work and helpful recommendations in such difficult times.”

Gordon is also proposing to simplify the state’s budget structure, which currently includes a large number of accounts where money is set aside for specific purposes. His proposal is for “One Checking Account, One Savings Account.”

“This would make the state’s budgeting process more transparent, reflecting my pledge for fiscal transparency,” Gordon said.

After July’s budget cuts, Gordon took a more strategic approach to his next round of reductions, achieving a balanced budget with some agencies absorbing deeper cuts than others.

“It is a fact that we cannot reduce our spending without looking at our largest agencies,” Gordon said. “The Department of Health, the University of Wyoming, the community colleges, the Department of Corrections and the Department of Family Services make up two-thirds of the state’s general fund budget.”

Among the Governor’s total proposed cuts is $135 million to the Wyoming Department of Health. The WDH cuts will impact programs including health care coverage for disabled and low-income residents, mental health services, substance abuse treatment and developmental preschools. 

“My proposed cuts to the Department of Health followed the agency’s recommendations and will minimize the negative impacts on the citizens of Wyoming. However, it is a harsh reality that at this point every cut will hurt,” Gordon said.

The $700 million general fund budget of the University of Wyoming and the community colleges makes up almost a quarter of the total general fund budget.

Last week, the UW board of trustees approved a $42 million reduction plan presented by UW president Ed Seidel.

To balance the budget and prepare for future revenue shortfalls, Gordon is proposing nearly 15% reductions to higher education.

Some agencies, including the Governor’s Office, will experience nearly 20% cuts if the Legislature approves this proposed budget. 

Gordon did caution that after these budget reductions there remains a nearly $300 million deficit still as of Monday, resulting from the cost of K-12 education.

This overrun is covered with dollars from the state’s “Rainy Day Fund,” an account the Legislature established. However, Gordon noted that if the shortfall is not addressed, this deficit could grow to as much as $600 million in two years.

This is one area where only the Legislature can act.

“A well-funded educational system is a source of pride and economic opportunity for our state. It is essential for our families and our children just as low taxes are,” Gordon wrote in his budget message. “Our circumstances require that we evaluate all school spending and consider its importance to our state’s future. These are dollars that go into local economies too.  I appreciate the Legislature’s Recalibration Committee’s hard work on this topic and look forward to their proposals.”

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Wyo State Senator Predicts Energy Industry Won’t Recover

Published on in Energy/News
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Wyoming State Sen. Dave Kinskey on Wednesday said Wyoming’s energy industry — always prone to boom and bust — may never ever see a boom again.

Appearing at a legislative forum earlier this week, Kinskey — who represents Sheridan and Johnson counties — said the domestic and international sentiment against fossil fuels — coupled with a Democratic president — will likely spell doom for Wyoming’s oil and gas industry.

“I mean the legislation worldwide and across the United States and now with a Biden Administration, the war on carbon is going to continue at an increased pace,” he said.

This means, he said, that Wyoming’s economy — with 60 percent of the state’s revenue coming from coal, oil, gas, and other extractive industries — is going to be hit hard.

“By the time you add in the additional effects of sales tax from those, it is dropping dramatically. Add to that the complications of COVID-19, and we’ll come out of that but we’re not going to come out any time soon from the tailspin on oil, gas, and coal,” he said.

Kinskey said the state’s revenues are projected to be down between 25% and 30% over the next four to six years.

He said the state is $200 million away from balancing the portion of the budget not related to education, but the deficit in the state’s budget for public schools continues to grow.

To that end, Kinskey has asked the state’s school districts to be willing to accept budget cuts and to find ways to take cuts in revenue without hurting education.

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CREG Report Released: Wyoming Still Looking At Deficit, But Lower By Almost Half Than Earlier Projections

Published on in News/budget
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By Jim Angell, Cowboy State Daily

While the Wyoming’s main bank account is still expected to fall short of what is needed to pay for state operations for the next two years, the level of that deficit has been cut almost in half, according to a state report.

A group of state fiscal experts, in a report issued Monday, said the state’s General Fund, the fund used to pay for most government operations, will fall about $451.1 million short of estimates used to prepare the state government budget for the current biennium.

However, that is an overall improvement of almost $426 million from estimates released in May, the report from the Consensus Revenue Estimating Group said.

The improved picture for the fiscal 2021-22 biennium were caused by tax collections in fiscal 2020 — which ended in June — that were higher than expected, an improved revenue outlook for the current biennium and improved revenue estimates for the state’s Budget Reserve Account, which is used to supplement the General Fund when the state needs additional money.

The report said all three upturns were due in part to the federal government’s CARES program and other steps taken during the pandemic to ease the economic impact caused when businesses were closed and activities were restricted to slow the spread of coronavirus.

“The downturn in Wyoming’s economy and associated revenue collections are historic, especially for Wyoming’s top two industries — mining and tourism,” the report said. “However, the depths of the downturn, to date, have not been as severe as contemplated in the May 2020 projection in part due to actions of the federal government.”

In addition, the May report was issued at a time when national and state parks were forced to close by the pandemic, the report said.

“This October … report also recognizes the rebound in tourism experienced over the summer, crowning with record visitation in the moth of September at both Grand Teton and Yellowstone National Parks,” the report said.

The improvement in tourism contributed to the state collecting $81.3 million more in sales and use tax revenue than had previously been forecast, it said.

The report also noted that when the earlier estimates were issued in May, the state’s energy industry was feeling the impact of a global oil price war which has since ended. 

The end result was that while production and tax income fell from 2019 figures, they did not fall as far as forecast in May, it said.

Moving forward, the state will see continued economic recovery, but it will be slow, the report said.

“Looking forward to the remainder of this calendar year and (fiscal) 2021, the themes found within this forecast include a relatively muted, extended recovery in the extractive industries with more overall optimism in total sales and use tax collections,” it said.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Gordon says true biennium budget will lead to better planning

Published on in Government spending/News
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Gov. Mark Gordon’s efforts to create a true two-year budget for state government should encourage state agencies to plan better for the future, he said Thursday.

Gordon, speaking during a news conference, said his plan to limit supplemental budget requests to true emergencies will lead agencies to plan better for the state’s biennium budget cycle rather than depend on supplemental budgets, such as the one passed recently by the Legislature.

“We’re working very hard to make sure that what is conveyed in (the two-year budget to be reviewed in 2020) is truly a biennium budget,” he said. “Hopefully, by looking at a two-year cycle, you start to look at what you really need. I’m working with the Legislature to see if there are ways we can incentivize better savings and build a cost-conscious culture throughout our agencies.”

State agencies submit two-year budgets for approval by the Legislature during even-numbered years. Supplemental budgets are submitted during odd-numbered years and were originally seen as a way to provide funding for urgent needs until a new two-year budget could be approved the following year.

In recent years, the supplemental requests have become more substantial.

Gordon admitted he is not the first Wyoming governor to try to limit the use of supplemental budgets.

“I’m certainly one of a number of governors that have tried this, but I’m really going to try to stick to this,” he said.

Gordon said he has already advised state agencies to budget with declining revenues in mind.

“The budget instructions I sent to agencies reminded them that revenue streams will be tight,” he said. “My goal, and I’ve been pretty consistent, has been to avoid across-the-board cuts.”

The governor also said he wants to study the number of uninsured children in the state, which a recent study said was nearly double the national average.

“I’ll bring together a task force with our insurance agencies to see what tools and what efforts we can apply to really address that issue,” he said.

On other issues, Gordon announced he has named policy director Buck McVeigh to serve as his acting chief of staff, filling the vacancy created with the retirement of Pat Arp.

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