CHEYENNE — Gov. Matt Mead proposed Tuesday cutting $248 million from the state budget beginning July 1, which will result in 677 layoffs of private-sector employees who work for companies that do business with the state.
“There are no easy answers, no easy process to address the situation,” he said.
The planned cuts represent about 8 percent of the state’s two-year budget that starts July 1, Mead said. They come in response to declining revenues from oil, gas and coal, which provide 70 percent of the money in state coffers. In recent months, state economists have revised revenue projections downward by $600 million. For instance, coal production has fallen to 1995 levels.
The governor presented his recommendations to the Joint Appropriations Committee, a group of lawmakers who review the state budget. The committee and legislative leadership will review the plan and either adopt the cuts or reject them and plan a special legislative session, Mead said.
“I don’t like the cuts,” Mead said. “You will not like them either. The more appropriate question is, have we cut in the right places and the right amount?”
GOP leaders on Tuesday said a special session is unlikely.
The Appropriations Committee will look at Mead’s proposal and determine whether the governor missed anything, said Senate President Phil Nicholas, R-Laramie, who said he has been through the process a few times during his years in the Legislature.
“In almost all those instances, what we find is that when given the information the governor has, we would probably implement those same changes,” said Nicholas. “So we understand that budgets from time to time have to be reduced to meet falling revenues, and we direct the governor to respond to those events.”
Nicholas believes the cuts should have been closer to 12 percent, but 8 percent is a decent beginning, he said.
Rep. Mary Throne of Cheyenne, the Democratic leader in the House, called the cuts potentially devastating and “the direct result of poor decisions made in the legislative session.”
All the Democrats in the Legislature voted against the budget bill, adopted in March, because they disagreed with the Republican majority’s fiscal decisions.
“In decisions, that my caucus opposed, we funded buildings instead of leaving the governor the flexibility to implement the budget we just passed to serve the citizens of Wyoming,” she said. “The failure to expand Medicaid only made a difficult situation worse. As policymakers, I fear we are continuing to take steps that will further weaken our economy.”
Health hit hard
Mead’s proposed reductions will hit the Department of Health hardest, with $90 million in cuts. The department receives a considerable amount of federal money, and Mead said he tried to cut the agency in a way that would affect that funding the least. The nearly 700 lost jobs will come from private-sector employees who work in health care, he said.
Seven state employees will lose their jobs, Mead said: three in the Wyoming Attorney General’s office, one at the Department of Health and three at the University of Wyoming’s medical education program. That number could drop if workers quit or retire, he said.
Although the state is cutting $90 million from the Department of Health, its director, Tom Forslund, told lawmakers the actual fiscal impact will be $133.4 million, due to a loss in federal funds of programs in which the federal government matches state money. That’s on top of $10 million the Legislature cut from the department in March, Forslund said.
In all, 9.2 percent of the Health Department’s budget will be slashed, Forslund said.
Twenty-three Health Department programs are being cut. An oral health program for low-income people, mainly children, is being eliminated.
Other programs are being reduced — such as a substance abuse and suicide prevention program, which is being cut by $2.1 million, or 16 percent, Forslund said. Wyoming has historically had one of the nation’s highest suicide rates.
There are signs the proposed cuts are affecting state employee morale. Forslund said in his agency, some employees accused him of cutting the programs he dislikes. Forslund said that was not true. He didn’t want to cut any service.
Forslund said he can’t say whether any private companies that provide contract services for the Health Department – such as taking care of people with mental health needs – will go out of business. Some of it will depend on whether the service providers have reserves, are financially strong and can sustain reductions.
“It’ll hit across the state,” he said.
Cuts vary by agency
While the cuts average 8 percent, they vary by agency. For example, an 8 percent hit at the Department of Corrections would have been $20 million, but because of steep cuts made by the Legislature in March, Mead said he will slash $17 million.
The Department of Family Services, meanwhile, will be cut by $13.9 million instead of $19 million to help protect the state’s safety net.
“Reductions of this magnitude should not be achieved with across-the-board cuts,” Mead said.
In March, lawmakers adopted a $3 billion budget for the new two-year budget cycle, which begins July 1. That budget includes spending $221 million from the state’s $1.8 billion rainy day fund. Investment income over coming years will repay the fund, lawmakers said. The budget also eliminated all state government positions that had been vacant for six months or longer, it cut numerous programs and reduced nearly all agency budgets by 1.5 percent.
However, after lawmakers departed Cheyenne, a state report showed revenues would continue to plunge by about $120 million.
The state will cut $56.3 million from the traditional Medicaid program and will lose $29.9 million from the federal government in matching money for doing so, bringing the total reduction of Medicaid to $86.2 million, or 6 percent.
Lawmakers continue to reject Medicaid expansion, a different program under the Affordable Care Act. Expansion, Mead has argued, would boost the economy and provide health care to 20,000 low-income Wyoming adults. Mead’s office estimated that had expansion passed last year, about $268 million would have flowed to hospitals and clinics, doctors and other health care providers. Additionally, the Wyoming Department of Health would have saved money over the two-year budget cycle. The department offers services such as cancer screenings to low-income people that would be covered by Medicaid. The money for the services came from the general fund.
Mead said if the Wyoming Legislature had expanded Medicaid, the cuts would not have been as severe. He said he will continue to push for expansion.
Forslund, the Health Department director, reminded lawmakers that for three years he asked them to shift spending of the services from the general fund to the Medicaid program. But most of those services will be eliminated July 1 as a result of the cuts. Now the Legislature will not be able to shift costs.
Impact on construction
Wyoming is undergoing a state building boom, which Democrats have criticized as unnecessary. Mead said he looked at the construction projects during his budget deliberations. But many of them are being paid for from federal Abandoned Mine Land money, and Mead said he lacked the flexibility to stop their construction.
Mead has asked the Wyoming Legislature to delay construction of a state office building in Casper, which isn’t scheduled to begin until 2018. He also wants the state to delay expansion of a state prison in Torrington.
Mead said he is more concerned with structural problems at the 16-year-old Wyoming State Penitentiary, which has buckling walls and warped floors. The state is considering costly repairs, abandoning the building and erecting a new prison or a combination of the two.