Low prices for natural gas and lagging demand for coal along with efforts by the federal government to cut expenses are among the culprits raising concerns about the state’s budget, as are the many needs of the state for road maintenance, school maintenance and assistance to the state’s cities and counties for needed projects.
A report released this week presents a more positive revenue estimate of Wyoming’s revenue picture than was predicted last January when the Wyoming Legislature set a budget for the 2013-14 biennium, but it also forecasts lower production of natural gas and coal in the coming months, so the revenue estimate is less than a year ago. In addition, Congress has capped payment to the state from abandoned mine clean-up funds, a move that could cost the state $700,000 over the next 10 years.
On a positive note, the currently estimated revenue, $85 million more than the January estimate, is adequate to cover the 2013-14 budget passed during last winter’s budget session of the Wyoming Legislature. The negative is that the estimate is still $30 million lower than a year ago. Consequently, Gov. Matt Mead and the Wyoming Legislature remain concerned for future budgets.
The Legislature responded to the January estimates by mandating 4 percent cuts by all state agencies, and Mead doubled that, asking each department to identify cuts of 8 percent to make sure the state doesn’t outspend its revenue. Both of those mandates are still in effect, and state officials continue to look for that 8 percent, despite the additional revenue now forecasted.
Targeting places to cut spending is wise, because, inevitably, there are areas where unnecessary spending is happening. Still, cutting too deeply is not wise, and Mead’s response to this week’s report identifies some big expenditures, such as forest fire suppression, aging landfills around the state and water development that must be paid for.
It is important to note that Wyoming is not broke and the state’s permanent savings continues to grow. In each budget, the state puts 2.5 percent of revenues from mineral taxes into permanent savings, but Mead noted that only 1.5 percent is mandated by the state’s Constitution. The Legislature could divert the other 1 percent to the general fund if it chose to do so, and Mead, while not suggesting that such a diversion is necessary at this time, said state leaders should at least discuss whether continuing to put more money into savings given the current revenue situation and the state’s future needs is wise.
Wyoming has gone through cycles such as this before, and our state leaders have always found ways to keep the state in sound financial condition without neglecting necessary spending. We believe that our current leaders will make the cooperative effort to navigate this downturn as well.
For the future, though, we believe the state must intensify its search for alternatives to our heavy dependence on mineral taxes. The world is changing, and some of the changes may be permanent — the downturn in demand for coal, for example. Such changes would have serious consequences for future budgets.
Diversity may be vital to maintaining the economic health and the quality of state government we have come to expect in Wyoming.