You are the owner of this article.
Wyoming revenue projections drop in new report, but budget likely to remain balanced
breaking top story

Wyoming revenue projections drop in new report, but budget likely to remain balanced

{{featured_button_text}}
Flaring

Roy Merrill, an engineer at a Wold Energy drilling site near Rolling Hills, points out various parts of the rig during a 2017 tour of the well. Revenue projections for the state have dropped, mainly due to markdowns in natural gas prices and a subsequent drop-off in sales tax revenues, a new report says.

Gov. Mark Gordon’s proposed budget for the next two years will remain balanced despite a more than $70 million reduction in revenue projections since October, the state’s top budget officer said Friday.

According to new numbers presented to the Legislature’s Joint Appropriations Committee this week by the state’s Consensus Revenue Estimating Group, the Legislature will have just $12 million to play with in its upcoming budget, primarily due to significant markdowns in natural gas prices and a subsequent drop-off in sales tax revenues.

The reduction in projected revenues over the next two years — somewhere in the ballpark of $75 million — will leave the budget proposed by Gordon late last year effectively balanced. However, it will eliminate most of the flexibility offered to the Legislative branch in that budget proposal, which included roughly $70 million in “buffer” funding to allow the state to offset future declines in revenues.

Any other expenditures beyond that in the upcoming budget would likely have to be funded by two mechanisms: an increase in taxes or dipping into savings, CREG co-chair and Budget & Fiscal Administrator Don Richards said.

“You’re essentially right at balanced — just barely — on a $3 billion budget,” he said.

Gov. Gordon's budget comes with few cuts but a warning for the future

While revenues were projected to decline almost across the board, the biggest impacts are anticipated to come from declines in natural gas prices, which currently sit at their lowest point in three years. According to the latest numbers from CREG, natural gas prices are expected to decline by 35 cents from the group’s projections in October under the latest report, accounting for nearly half of the anticipated declines in revenue over the next biennium.

Bill proposes $43 million in previously untouchable funding for education

Sales tax — which had been on a steady incline, according to numbers released by Pew earlier this week — saw a slight hit in the final quarter of 2019, due primarily to a seven-figure rebate to a single company on three years of sales and the effects of a late November snowstorm that effectively shut down the state. However, Richards cautioned that the rosy performance of 2019 driven by increased energy activity could begin to level off in 2020.

“There are some signs of a weakening economy in the state as some oil pipeline projects have been completed and drilling activities are slowing,” the report read. “The Impact Assistance Payments to local governments (reducing the amount of sales and use taxes deposited to the [general fund]) have already totaled $14.0 million in the first half of FY 2020, compared to $10.9 million in all of FY 2019 and to $7.2 million in the five fiscal years combined prior to FY 2019.”

Investment income — one area of uncertainty for the state heading into this year — remains consistent with October’s projections, Richards said. However, traditional legs of Wyoming’s revenue streams, like coal, are projected to continue their precipitous decline downward. Friday’s report downgraded October’s projections for coal production from 290 million tons to 270 million tons in 2020 as prices for Powder River Basin coal continue their trend downward.

Wyoming pays one-fifth of its bills with investment income. What happens when a recession hits?

However, the state’s oil production is currently outpacing CREG’s projections, and prices could potentially rise over the next 30 months.

“We are probably underestimating the price,” Richards said.

0
1
1
0
1

Get Government & Politics updates in your inbox!

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Politics Reporter

Nick Reynolds covers state politics and policy. A native of Central New York, he has spent his career covering governments big and small, and several Congressional campaigns. He graduated from the State University of New York at Brockport in 2015.

Related to this story

Get up-to-the-minute news sent straight to your device.

Topics

News Alerts

Breaking News