Rebounding Wyo. economy boosts revenue projections

AP News
|
Posted: Oct 22, 2010 7:42 PM
Rebounding Wyo. economy boosts revenue projections

Improvements in Wyoming's economy, led by a resurgent energy industry, are prompting budget analysts to predict healthy increases in state revenues over nearly the next two years.

The state's Consensus Revenue Estimating Group on Friday released its projections for the budget cycle that runs through June 2012. It says the state will have almost $580 million more for its general operating and reserve accounts. It also predicts an additional $392 million in school construction and operating funds.

Some of the new money is already in the bank, while analysts predict the rest will flow into state coffers over the remainder of the two-year budget cycle.

Lawmakers this spring finalized a two-year, $2.9 billion state funds budget that will run through mid-2012. Federal funding for highways and some other projects is in addition to that.

The state had roughly $700 million in available reserves at the end of the fiscal year that ran through this June.

The new money means that lawmakers could choose to spend more than $1.2 billion in a supplemental budget when they come back to Cheyenne in January. However, there's likely to be a strong push among many fiscal conservatives to keep a substantial amount in reserve.

Gov. Dave Freudenthal said Friday that he's encouraged by the new revenue projections. His administration is crafting its final budget recommendations now; he leaves office at the end of the year.

Freudenthal said the state could give some extra money to cities and counties, or put more money into highway projects. He said the state could also address "the employment circumstances of both state and higher education employees."

The current two-year budget doesn't include pay raises for state employees. They've been further pinched by starting to pay a portion of their retirement benefits in recent months.

However, Freudenthal also said, "I would encourage people to view this with caution, in that much of the money is already spoken for to support the expanded Medicaid rolls and to set aside money to substitute, in the next biennium, for the funding associated with the stimulus package."

The CREG group's report predicts increases in state revenues across the board, including sales taxes and investment income. The leader, however, is projected increases in the severance taxes the state charges on energy production.

Buck McVeigh, co-chairman of the CREG group and head of the state's Economic Analysis Division, said Friday that it seemed Wyoming was about a year behind the rest of the country in falling into the recent recession.

"We naturally thought that because of the year's lag time, that on the other end of it, we were going to lag by the same amount of time getting out of it," McVeigh said. "It hasn't turned out to be that way. Not only have we caught up with the nation in terms of the economy, we're actually outperforming the national economy in a lot of ways."

Jim Robinson, senior economist for the Economic Analysis Division, said Friday that employment in Wyoming's oil and gas industries was over 20,000 for several months in late 2008. He said it dropped to 14,500 by August 2009 but had rebounded to 16,400 by this August.

Bill Mai, co-chairman of the CREG Group and budget and fiscal manager for the state's Legislative Service Office, called Friday's report good news for the state.

"The bottom line here is that in January, I think everybody realized that it was important to remain pretty conservative in the outlook," Mai said. "Because the national economy, the international economy and the state's economy, all of them were kind of operating right on the edge and they frankly could have gone either direction. They could have improved, or they could have gotten quite a bit worse."

Mai said he and other state analysts now feel a tempered optimism. "Not sort of the skies the limit kind of thing," he said. "But things didn't turn out as bad as they could of, and things look like they're on the mend."