April 17, 2020 |
Prepare for impact. As local communities and school districts around Wyoming begin their annual work on preparing budgets for the upcoming fiscal year, the governor said this week that state revenue projections made earlier this year already are obsolete.
Governor Mark Gordon called the April CREG report, which has not even been released yet, “an antique.” The reason: Fiscal impacts from the coronavirus crisis have not shown up in the numbers yet.
The decline will start to be seen by next month, the governor added.
Oil production has come to a stop with prices at an 18-year low. The price of Brent crude fell below $20 a barrel yesterday. WTI dropped below $20. Coal also continues to slide. The price of Wyoming’s other big commodity, trona, is also under pressure from China.
With state revenues tumbling, the governor said the legislature may have to meet in an emergency session before summer.
Last week, the Legislative Service Office sent a letter to members of the 65th Legislature saying the January CREG report used to prepare the biennial budget in February is “no longer a reasonable project of state revenues in the near term.”
In the memo, the economists predicted that revenue shortfalls could range anywhere from $555 million to nearly $2.8 billion over the next two years.
The budget lawmakers prepared this year calls for $2.8 billion in spending over that time. In other words, the revenue shortfall could be equal to spending amounts the legislature approved.
Governor Gordon called the situation not just disappointing, but sad. He has ordered state agencies to start preparing for cuts.
In addition to salary freezes, general fund contracts greater than $100,000 have been stopped. The governor also called state agencies to re-examine their budgets and priorities and look for areas to cut.
Although the state will receive federal funding through the CARES Act recently passed by Congress, those monies can only be spent on coronavirus response programs and cannot be used to backfill revenue declines. The governor said recovering from the economic crisis could take up to two years.
Image courtesy of the Office of Governor Mark Gordon.