Gov. Mark Gordon reads a passage from the Wyoming Constitution during a press conference Thursday, June 4, 2020, inside the Capitol in downtown Cheyenne. Michael Cummo/Wyoming Tribune Eagle

CHEYENNE – With Wyoming projected to face a $1.5 billion revenue shortfall over the next two years, Gov. Mark Gordon instructed state agencies Thursday to prepare for a 20% cut to the state’s 2021-22 biennium budget – reductions that will lead to layoffs of state employees and the elimination of state programs.

During a news conference Thursday afternoon, Gordon said all indications point to Wyoming facing its largest decline in revenue in state history, a drop-off brought about by both the years-long depletion of the state’s mineral industries and the economic devastation caused by the COVID-19 pandemic.

With nearly a third of the revenue for the state’s general fund budget no longer expected to materialize, Gordon said he was preparing a phased reduction approach. That began with a government-wide hiring freeze in April and will continue with further cuts by July 1.

“There will be layoffs,” Gordon said Thursday. “There will be potentially furloughs and other things that occur. This isn’t easy.”

Wyoming, which has no state income tax and comparatively low property and sales tax rates, has relied on the revenue that has come with mineral production for decades. Gordon noted the wealth brought by the mineral industries has allowed Wyoming residents to receive 10 times what they pay in taxes in state services.

The cuts that will be implemented by July 1, Gordon said, could amount to roughly 10% of the state budget, though specific reductions have yet to be released. More details could come to light Tuesday when the Legislature’s Joint Appropriations Committee, the powerful group of lawmakers that oversees the state’s biennial budget, will hold a virtual meeting.

While state agencies brace for cuts, there is also the other side of the budget equation: revenue. In response to this reporter’s question on what revenue-raising options he though the state should pursue, Gordon mentioned sales tax exemptions may be something to get rid of, a measure estimates show could bring in roughly $71 million each year to the state.

“There are other options out there on the table, but I think we start with where we’ve given up in normal sales tax exemptions, because every time you do an exemption, you create some sort of distortion in the market,” Gordon said. “It’s very important that we have a very clean and clear economic enterprise opportunity.”

Regardless of which direction the state goes, the governor said he wants to keep people informed about the impact of the cuts “without trying to sugarcoat anything about the crisis.”

In October, well before the pandemic, Wyoming was already facing a projected revenue deficit of more than $200 million in the next few years. But the pandemic accelerated and aggravated virtually every issue the state was facing.

“It is absolutely critical that we approach this crisis with compassion, with forethought and with a view of where we’re going to go,” Gordon said. “I’m almost speechless as I deliver these words, but it is essential.”

Tom Coulter is the Wyoming Tribune Eagle’s state government reporter. He can be reached at tcoulter@wyomingnews.com or 307-633-3124. Follow him on Twitter at @tomcoulter_.

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