CHEYENNE – Wyoming’s state revenue collections have continued to outpace expectations from earlier this year, according to experts.
The Consensus Revenue Estimating Group, or CREG, released its April report Friday, providing an updated summary of the state’s major revenue sources. It comes as good news to the Wyoming Legislature, which is continuing to struggle through gaps between income and current spending levels.
The Cowboy State relies on mining for around 70 percent of its revenue. When commodity prices declined in late 2014, it sent Wyoming into an economic bust that saw cuts to state agencies and K-12 education. Increased mining activity was projected to give lawmakers an extra $141 million to work with going into the 2018 budget session that started in February. State agencies emerged from the session with no significant cuts, some funding restored and state-funded construction projects covered.
However, K-12 education took a $27 million cut to its escalating costs in the two-year budget cycle. That compounded a $77 million reduction made during the 2017 general session.
The January report was a forecast of revenues, and the April report is a measuring stick that compares actual state revenue collections to date against the January forecast, said Don Richards, CREG co-chairman. Though it shows Wyoming is nowhere near its pre-bust levels, this spring’s update is positive, he said.
“The April revenue update shows actual state revenue collections are exceeding the January 2018 CREG forecast, albeit by relatively modest amounts,” Richards wrote in an email.
Gov. Matt Mead said those gains are welcome news. He highlighted that the realized capital gains mean conditional appropriations for key state construction projects will be fully funded. Those projects include state health facilities, the University of Wyoming Science Initiative building and a state office building in Casper.
“The report helps us as we begin preparing a supplemental budget for next session,” Mead said in an email.
The bottom line showed general fund and Budget Reserve Account revenue collections exceed the January forecast by $15.1 million, or 1.4 percent, and $19.9 million, or 5.7 percent, respectively. An internal transfer from a severance tax account is also exceeding expectations by $5 million, or 5.5 percent. Severance tax collections are also above previous projections, reflecting a positive trend in energy production and pricing.
Barring a significant decline in commodity prices or production, revenue to the general fund, Budget Reserve Account and One-Percent Severance Tax collections should exceed expectations. Investment earnings are also on pace to be fully funded.
Severance taxes and federal mineral royalty collections are in line with CREG expectations, with potential for even better gains. Sales and use taxes – the largest revenue contribution to the general fund and a critical revenue source for local governments – are also exceeding expectations.
But the modest improvement isn’t a cure for the state’s fiscal woes, said Senate President Eli Bebout, R-Riverton.
“We still have a huge structural deficit that went up after we left the session by a substantial amount,” Bebout said. “All of the issues and discussions we’ve had in the last two years are still there.
“We’ve done a few good things, no question about it. We probably haven’t had the reductions that some people, including myself, think we should look at further. But thank goodness we’ve had a conservative approach and the (Legislative Stabilization Reserve Account, or ‘rainy-day fund’) to rely on.”
House Speaker Steve Harshman, R-Casper, also said it’s true Wyoming isn’t out of the woods yet. But he said the deficit isn’t as large as some say.
“When you hear $1 billion, that’s a bit disingenuous,” Harshman said. “The whole structural deficit is really half of what’s being touted out there.”
But any movement toward a more positive economic picture is good news, Harsh-man said. The Legislature will continue making moves to reduce the deficit that will hopefully compound with upward trends in revenue, he said.
“It’s solvable, and we’ll keep pecking away at it,” Harshman said.