State of the State

Gov. Mark Gordon greets people outside the House Chamber following his 2020 State of the State address in Cheyenne. His office plans to develop the bulk of the state's next budget without cuts thanks to rosier revenue projections.

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Gov. Mark Gordon’s office will develop the bulk of the next state budget without cuts thanks to improved revenue projections released last week, an official said Friday.

The news comes on the heels of a string of budget cuts over the past year that were prompted by a downturn in the energy industry and the COVID-19 pandemic.

“The standard budget that we’re going to build this year won’t involve cuts,” said Gordon spokesman Michael Pearlman, meaning the general fund and the budget reserve account — essentially the state’s two checking accounts— will see zero reductions.

The decision from the governor’s office comes in response to the informal update to January’s report issued by Wyoming’s Consensus Revenue Estimating Group (CREG). The informal update shows that the state has more money than the January report originally projected.

The revenue group is responsible for developing projections for Wyoming’s main sources of income. Its members provide revenue estimates in January and October of each year that may be used by the executive branch and the Wyoming Legislature in the state’s budgeting process.

Thursday’s update showed the state’s general fund budget exceeds the January projection by $45.5 million, or 4.6%, and the budget reserve account exceeds the January projection by $25.7 million, or 16.2%. Mineral and investment revenues primarily drove the upturn, along with the improving national economy and increased household income.

“Almost all revenue sources are exceeding January expectations,” said Don Richards, the group’s co-chair.

While it is not an actual amendment to the January forecast, the report is a conservative indicator of where the state is at ahead of next year’s legislative budget session.

The optimistic projections follow multiple rounds of budget cuts prompted by the pandemic and the downturn of the energy and mining sectors, which resulted in layoffs and reductions to government services.

But it’s not all blue skies ahead, multiple state leaders cautioned.

“It’s not like everything’s fixed or anything, but it gives us more breathing room. You know, we still haven’t figured out the education funding issue and that’s going to be the big thing,” said Sen. Cale Case, R-Lander, chairman of the Revenue Committee.

The revenue group projected that the various K-12 funding areas are only modestly ahead of the forecast or are lagging slightly behind January expectations.

Education funding is in a systemically precarious state that long precedes the budget cuts of 2020, however. In the recently completed legislative session, lawmakers failed to reach a deal on cuts designed to address structural problems in how Wyoming pays for its public school system.

“As a result of coal’s decline, the state has taken money from its rainy day account to make up shortfalls,” Jillian Balow, state superintendent of public instruction, wrote in a Star-Tribune guest opinion. “Now, with oil and gas production on federal land in question, we are borrowing even more from a smaller rainy day account. The stagecoach falls off the cliff when the rainy day account can no longer cover the shortfalls. At the current speed, we have five, maybe six, years before this will happen.”

Additionally, this week’s update to the revenue projections was not able to reflect the federal moratorium on new oil and gas drilling leases, which President Joe Biden announced in January. The federal government has collected $438 million from lease sales in Wyoming over the past four years, with about half of that money going back to the state.

“This update hasn’t really captured the impact of oil and gas lease moratorium, and that’s something we need to keep in mind as we express cautious optimism,” Pearlman said.

Gordon will issue budget recommendations in the fall. What this lack of cuts means for the specific agencies remains to be seen.

This article originally ran on trib.com.

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