Wyoming Gov. Dave Freudenthal on Tuesday proposed major cuts to transportation and local government funding as part of a leaner state budget for the next two years.
Freudenthal proposes a $3 billion state General Fund budget for the two-year funding cycle that starts next July. The proposal would cut government spending by $300 million from the current biennium budget to help the state cope with falling energy revenues.
Since early summer, state financial experts have lowered their projections of state revenues for the coming biennium by $380 million.
Local governments would take a big hit under Freudenthal's budget proposal. They received more than $400 million through various programs under the current budget but would see their funding cut to about $170 million in the coming biennium.
"These will be difficult years for town, city and county governments experiencing significant reductions in locally generated revenues," the governor stated in his budget message.
Freudenthal also proposes to limit state General Fund spending on highways to $50 million, down from $200 million in the current biennium.
Freudenthal's budget calls for no pay raises for state employees. He also calls for keeping hiring restrictions in place that went into effect this summer.
"The world is different than was projected," Freudenthal stated in a letter to the Legislature accompanying his budget proposal.
"Our economy and our revenues have declined," Freudenthal wrote. "This budget is different than we might have hoped. But this is still a robust budget compared to other states and even to Wyoming in 1990s."
The Legislature will convene in February for a 30-day budget session. One major issue facing state lawmakers likely will be whether to follow Freudenthal's suggestion that they avoid spending down the state's Legislative Stabilization Reserve Account, the state's main rainy-day fund.
Freudenthal estimated the reserve account will hold roughly $700 million by next July. But he warned that the state should keep the money in reserve against an uncertain future.
Rep. Rosie Berger, chairwoman of the House Appropriations Committee, said state lawmakers already appreciate that the state is facing tough financial times. She noted that the Joint Appropriations Committee last month recommended against giving raises to teachers.
Berger, R-Big Horn, said she believes that all lawmakers on the appropriations committee hope the state doesn't have to dip into the reserve account.
Chris Boswell, Freudenthal's chief of staff, said the state expects that rising enrollment in Medicaid will cost the state $150 million over the coming biennium. He said the state intends to use money from the federal economic stimulus program to address the increases and also intends to cut reimbursement rates to doctors and other medical professionals.
Freudenthal's budget calls for the state to continue token payments into various quality-of-life trust funds. He recommends $5 million for the wildlife trust fund, $2 million for the cultural trust fund and $3 million for the library trust fund.