Gov. Mark Gordon finalized Wednesday the first round of state budget cuts, amounting to more than $250 million in reductions as the state reels from the economic fallout of the COVID-19 pandemic.
The cuts include the elimination of 274 state positions. The bulk will be vacant positions, but some layoffs will occur, said Kevin Hibbard, director of the state budget department. He declined to offer details when asked by reporters at a Wednesday news conference. A spokesman for the governor later said there would be around 20-30 layoffs.
The Department of Health will be hit with a 9% cut totaling roughly $90 million — the largest of all state agencies. It will impact services to low-income residents, seniors and those with developmental disabilities, the governor said. Funding will also be reduced for early childhood developmental and educational programs.
“(The cuts) are going to be devastating, but as governor, I am constitutionally required to balance the budget, and they are necessary,” Gordon said at the press conference.
The list of impacted services is long. The cuts include an additional $80 million in maintenance to state buildings and those at the University of Wyoming and community colleges. The University of Wyoming will see its own budget reduced by $42 million, though how exactly has yet to be determined, officials there said. The Department of Family Services, facing an $11.8 million cut, will eliminate vacant positions in the state office and field offices. The Department of Corrections, projecting cuts of $22 million, will experience significant cuts to programs that keep the public safe, the governor said. Parole agents, for example, will be required to supervise more offenders. Community colleges will have to do without $25.7 million.
“These are very difficult cuts to make and there are more coming,” Gordon said. “Each is agonizing.”
The state faces a $1.7 billion revenue shortfall brought on by the economic fallout from the COVID-19 pandemic and a global oil price war. As travel and business screeched to a halt, Wyoming’s energy sector faltered. A decline in coal production prompted another round of layoffs and furloughs. Meanwhile, twice this summer the state’s rig count fell to zero, something that previously hadn’t happened even once since six years before the state was founded.
Wyoming has relied on its energy and mining sectors to pay its bills for years, funneling billions of the corresponding tax dollars into critical infrastructure, public education and other vital public services. But those golden days may be numbered, Gordon said.
“The ability of those industries to continue to carry that load has been compromised; there’s just no question about that,” he said.
Despite taking sweeping measures to reel in expenses across the state’s agencies, Gordon declined to address the $500 million revenue shortfall facing K-12 education. Schools in Wyoming are not funded out of the general fund; they’re paid out of a separate account that’s roughly the same size of the entirety of the general fund.“After a review of all of our options to address this shortfall, we found that the governor’s statutory authority for educational funding is separate and different from my authority to manage funding in the executive branch,” he said.
How schools are funded has been established in principle by the state constitution and in practice by the state Supreme Court, which ruled 25 years ago that funding education was a primary duty of the state and had to be met regardless of the state’s fiscal situation. Cutting schools, a frequent topic at the Legislature in recent years, is a much thornier proposition than cutting the departments of Health or Corrections. But Gordon said he plans to ask school districts to voluntarily implement 10% cuts.
“This is where local control comes in,” he said. “They know best where to make those cuts.”
The size of the shortfall is immense. Earlier this summer, Gordon said if he laid off all 8,700 state employees at once it wouldn’t be enough to address the revenue decline.
But more cuts are coming, the governor warned. Those announced Wednesday are the first round, amounting to a 10% reduction. A forthcoming second phase will implement another 10% reduction.
“Keep in mind, this is the first 10%,” Gordon said. “And we have 20% more to go. This is just the tip of the iceberg.”
The Legislature has been tasked with finding solutions to resolve the remaining 10% shortfall, primarily through revenue diversification. Yet little progress has been made over the course of several interim committee meetings in recent weeks.
On Tuesday, the Legislature’s Joint Revenue Committee either tabled or voted down all proposed tax bills to help generate revenue. The options included legislation to increase the property tax assessment ratio, provide additional mills for school funding, institute a real estate transfer tax or increase the state’s sales and use tax.
Gordon said he wasn’t surprised by the lack of action on the tax bills, citing the state’s entrenched aversion to taxes and a misconception that Wyoming is flush with savings.
“I have been talking with the Legislature, and I do think to be responsible, we will have to have discussion about how to change revenues,” he said. “I started out these conversation about looking at exemptions we have in place.”
Gordon attempted to conclude on a hopeful note.
“I do believe that there are some reasons for optimism,” he said. “And I do think that there are brighter days ahead due to the sacrifices we are making, like wearing masks and staying socially distanced. More and more you see people that are aware of those things around the state, and we’re starting to make to make progress.”
Follow the latest on Wyoming’s energy industry at @camillereports
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