Unfortunately, it now appears that Wyoming’s financial ability to do good things isn’t quite as great as state officials had thought.
The Consensus Revenue Estimating Group informed Mead and state legislators on Friday that falling natural gas prices could mean $100 million less in tax revenue over the next two years than previously projected.
Mead’s proposed budget called for putting $400 million in savings and left $87 million as a kind of buffer for the Legislature to work with. However, Friday’s figures from the estimating group wipe out that $87 million “and we’re about $20 to $22 million in the hole that we may have to make up for somewhere else in the budget,” Mead said at a Wyoming Press Association luncheon on Friday.
He did not indicate where he might make changes.
“It is a challenge because the fact is, as we see ourselves today, and we look at the money we have in the bank, the fact is Wyoming is in very, very good condition, and we want to remain there,” Mead said.
The governor’s proposed budget for the coming two years had reflected a roughly $17 million, or just less than 1 percent, drop from the prior biennium.
The Legislature’s budget committee has been eyeing bigger cuts. Citing earlier projections from the Consensus Revenue Estimating Group that revenue will slow in coming years, the Joint Appropriations Committee asked state agencies to prepare budgets that would cut 5 and 8 percent. Mead, however, doesn’t want to cut that deeply — suggesting a 2 percent option — and he wants cuts done with precision. He said when state agencies had to make 10 percent cuts across the board under Gov. Dave Freudenthal, some of those cuts weren’t sustainable, and the agencies now are asking for the 10 percent back.
“The fact is, because natural gas prices continue to fall, all of us are going to have to take a strong look at the budget, including the budget I proposed and including perhaps the 2 percent cut,” he said Friday.
Outlining his proposal, Mead described funding for highways ($100 million proposed) and local governments ($168 million) as his top priorities.
He described Wyoming’s highways as the state’s backbone, critical for transportation and commerce. However, Mead said $100 million is not enough to keep up with maintenance, and the state must start looking at alternative or additional revenue resources. He said he doesn’t think a gas tax or toll roads have great political support — and he’s not a fan of toll roads — but “I am willing to look at anything with regard to funding our highways.”
The $168 million for local governments — like counties and cities — he described as money well-spent.
“If you don’t have basic infrastructure, if you don’t have good roads, water, sewer, landfills, fiber (optic cable) ... it is very difficult to keep the good businesses we have in Wyoming and then also attract new businesses,” he said.
With both highways and local infrastructure, he said the costs of maintenance only go up, making it fiscally conservative to fix things sooner than later.
“Infrastructure needs do not get better year after year,” he told Big Horn Basin commissioners on Jan. 5.
Now is a good time to work on building and maintaining infrastructure, he said, citing low labor and other costs.
Unlike in past years, consensus funding, which makes up 70 percent of the money distributed to local governments, would be allowed to be used on maintaining buildings — not just new construction or purchases. That change was welcomed by commissioners.
They also welcomed Mead’s position on the hundreds of millions of dollars of work that must be done to clean up the state’s landfills, many of which are at risk of leaking materials into groundwater.
“I have called it, and I think it’s appropriate to call it a state issue,” Mead said at the meeting.
“The state, while not meaning to, has put some of the municipalities in this position,” he said, noting that state regulators initially thought Wyoming landfills wouldn’t leak.
“The fact is we still have leaching problems, it just took more time,” Mead said. That’s why the state is requiring liners and increased monitoring at sites across the state.
The governor’s proposed budget calls for another $15 million to be put towards landfill remediation.
He also said the state must create an energy policy. Such a policy, he said, could lay out development corridors where industry could lay pipe carrying carbon dioxide for enhanced oil recovery — something that could yield 800 million to 1.2 billion barrels of oil in the Big Horn Basin.
“I think that because the oil is there, the infrastructure will come,” he told commissioners. “Our job in the governor’s office ... is to pave the way for it to go as smoothly as possible.”
On Friday, Mead noted his budget would put money towards the University of Wyoming’s School of Energy. He said it should be a place where students can get “a first-class education with regard to energy,” benefitting not only the students, but also industry in finding new and better ways of development.
Mead said he does not support the creation of another four-year university in Wyoming, describing doing so as “almost like divide and conquer.”
“I think we should have one university, that is the University of Wyoming. But the flip side of that is have very strong community colleges,” he said.
With regard to K-12 education, Mead has proposed $400 million for school construction and $100 million for major maintenance. He said the state’s public education system needs to compete on a global scale.
“We want to be A+ in spending and we want to be A+ in terms of our results,” he said.
While speaking to commissioners, Mead noted the criticism he took from some legislators last year for not being available.
“I felt like other than going to sleep, I was available,” he said. “But we’re going to be better at that.”
The budget session begins Feb. 13. The Legislature has the final say on the budget.