CHEYENNE — Lawmakers say slumping energy prices will limit how much money Wyoming will be able to spend this legislative session.
A revenue report released Friday projects the state will take in about $217 million less in traditional funds for the current biennium than budget forecasters expected in October.
Don Richards, co-chairman of the state’s Consensus Revenue Estimating Group and budget and fiscal manager with the Legislative Service Office, said this is largely because of lower-than-anticipated oil and natural gas prices.
Oil, in particular, has plummeted in just the past few months.
During the October forecast, the Consensus Revenue Estimating Group, which put out Friday’s report, expected prices of $85 per barrel for this calendar year. But Richards said Wyoming oil was trading at $39 per barrel as of Friday morning.
“We clearly — as with most investment houses, I might add — did not anticipate the depth or potential duration of the decline in oil prices,” he said. “It is an estimate, it is a forecast and, of course, it is subject to error.”
The $217 million hit to the state’s general fund and budget reserve account is on top of a $4 million deficit that lawmakers knew about going into the legislative session.
But Richards said there are plenty of options to make up that amount through cash that is available through reversions — money from past appropriations that were never used — the Strategic Investment Project Account, other various accounts, or by “intercepting” revenue that was scheduled to be added to the rainy-day fund.
The rainy-day fund, formally known as the Legislative Stabilization Reserve Account, also has nearly $2 billion that is available for use.
The big question for lawmakers, however, will be how much they are willing to spend on Gov. Matt Mead’s supplemental budget requests and for any bills that require new spending.
The governor is seeking about $156 million in funding increases in his supplemental budget. This includes adding more than $56 million for University of Wyoming programs and construction projects; $25 million for cities, towns and counties; and $21 million to add passing lanes on some state highways.
Sen. Tony Ross, R-Cheyenne, is the co-chairman of the Joint Appropriations Committee, which will start to take up the governor’s requests and begin to craft its own budget next week.
After hearing the revenue update, he said there won’t be enough money to approve all of the requests.
“The committee will have to prioritize the things that need to be funded, but not everything will be funded,” he said. “It’s just simple math, and we’ll work with the governor to try to prioritize those things.”
Rep. Steve Harshman, R-Casper, who is the other co-chairman of the JAC, agreed with Ross. He said lawmakers will have to prioritize the governor’s — as well as their own — funding requests.
But Harshman said lawmakers are not interested in completely rejecting the requests or other proposals that would invest money in the state’s future.
“I don’t think anybody is interested in closing down the state and saying that all we are going to do is protect state workers’ jobs,” he said. “We are going to continue growing the state, and we’ve done a good job in the past few years of flattening the growth of government, and we have set aside a little money for these types of events.”
Several Democratic lawmakers said despite the revenue concerns, the state has plenty of money in savings, whether it is the rainy-day fund or other sources, to pay for infrastructure projects and other programs this session.
“We have to be thoughtful about it,” Senate Minority Leader Chris Rothfuss, D-Laramie, said earlier in the week. “But the sky is not falling, and it’s not time to pull up the tent stakes and move on. We have a lot of positive things going.”
However, Rep. Tim Stubson, R-Casper, who also is a member of the JAC, said he is “dead set against dipping into the rainy-day fund” for the supplemental budget.
“These aren’t emergencies or things we can’t live without,” he said. “We will be able to fund some of it though what we have right now and through some creativity, but it is not the time to tap the (rainy-day fund) right now.”
Stubson and other GOP lawmakers added that they also want to be fiscally conservative in case energy prices remain low.
Richards said the Consensus Revenue Estimating Group’s revised projected price of oil for the rest of the year is an average of $50 per barrel. He said that means if prices don’t come back up relatively soon, there could be more bad financial news to come.
“We do need a rebound this calendar year from the current $39 per barrel in order to average $50 per barrel,” he said. “If it stays at $39 per barrel or lower, this forecast will be optimistic.”
This article was written by Trevor Brown from Wyoming Tribune-Eagle, Cheyenne and was legally licensed through the NewsCred publisher network.