Wyoming experts cut revenue forecast by $382M

A panel of state financial experts again has trimmed its estimate of revenues the state of Wyoming will receive in the two-year budget cycle that starts next July - this time by more than $380 million.

The state's Consensus Revenue Estimating Group on Monday released a new round of budget projections. It calls for a continued drop in state revenues that leaders say mirrors the decline in the state's energy economy.

The CREG group in May reduced its forecast of state fund revenues for the coming two-year budget cycle to $3.2 billion from $3.8 billion it had forecast in January.

The additional $380 million in revenue reductions forecast in this week's report already has been largely offset by savings the state made through budget cuts.

Gov. Dave Freudenthal said Monday that the CREG group's new projections are about what he expected. The governor has been meeting with state agencies in recent weeks to craft his budget recommendations for the legislative budget session that starts in February.

Freudenthal said the new reduction means the Legislature will have less money to spend on cities and towns, capital construction and highways when it convenes in February to craft the next two-year state budget.

The governor this summer instructed most state agencies to cut their budgets by 10 percent. He imposed restrictions on state hiring and has said he intends to keep those in place at least until the legislative session.

"We will budget fairly tightly because we can always adjust or change mid-biennium if we find that there's more money," Freudenthal said.

Freudenthal said he doesn't favor spending money from the state's Legislative Stabilization Reserve Account, a sort of rainy day fund.

The CREG report shows Wyoming should have nearly $340 million available for transfer into the reserve account. That's an increase of nearly $250 million over the amount the group projected in May would be available, with most of the increase due to the statewide budget cuts.

House Speaker Colin Simpson, R-Cody, said Monday the new CREG figures show it was proper for the Legislature early this year to give Freudenthal the authority to make the budget cuts.

"There's certainly going to be a shortfall, but what the Legislature and the governor did last session in anticipating the problem and authorizing the cuts, it now looks like there's a pretty clear understanding so the governor can move forward on his budget."

Buck McVeigh, co-chairman of the CREG group, said Monday that the decline in jobs in Wyoming, particularly in the energy sector, is driving the decline in sales and use tax revenues. The state's unemployment rate hit 6.6 percent in August, its highest rate in 20 years.

The CREG group in May projected the state would receive $995 million in sales and use tax revenue for the biennium that runs through next June. The report released on Monday cuts that projection to just under $932 million.

Jim Robinson, senior economist with the state's Economic Analysis Division, said Monday that higher than expected oil and gas prices should keep the state's severance taxes and royalties on energy production above projections for the current biennium that runs through next June.

However, Robinson said the CREG group expects energy revenues to decline in the coming two-year budget cycle. The group in May had projected nearly $434 million in severance tax revenues for the coming biennium but cut that projection to $387 million in this week's report.

Bill Mai, CREG co-chairman, said the group expects to see a slow economic recovery after the coming two-year budget cycle. He also said the group doesn't anticipate that state government will have to go through any major bloodletting to make the budget work for the coming two years.

"They're going to have to tighten up some, for sure," Mai said. "But I don't think it's going to be as drastic as a lot of other states have faced."