"Wyoming is very fortunate to have amazing resources and all of us benefit, but we are subject to price fluctuations in the commodities market and especially natural gas price fluctuations," Governor Matt Mead said. "Wyoming and our government are nimble and with this belt tightening we will continue working to make state government as efficient as possible."
In the State Budget the Legislature and Governor Mead directed state agencies to prepare cuts to their budgets of 4% for fiscal year 2014, but with natural gas prices moving still lower Governor Mead has now asked them to be ready with proposed 8% reductions.
On top of asking state agencies to prepare for cuts by the end of this year the State Legislature also asked the agencies to prepare cuts of 8% for the next biennium. "This year I submitted a budget that held ongoing spending flat, but looking ahead we need to be ready to reduce our spending in line with anticipated reductions in revenue," Governor Mead said. "If we see a turnaround and revenue increases, we may not have to make deep cuts going forward, but this advance planning allows for a more surgical approach if a reduction in spending is needed."
A reduction of 8% would result in a cut of $74.5 million dollars from the budget in fiscal year 2014, which starts on July 1st, 2013. Governor Mead has also asked state agencies to immediately institute a cap on staff positions. This can stem spending now. The Department of Health is exempt from preparing cuts because the Legislature has already directed the Department of Health to make 4% cuts. The instruction to other agencies is to prepare potential cuts.
Natural gas production provides the single largest source of revenue to the state. Wyoming analysts forecast future revenue and that forecast, as of January, predicts $3.25 per million cubic feet (mcf) for natural gas in 2012. The price is currently at a 10 year low, below $2.00/mcf. If this lower price holds through the end of 2012, it could mean a reduction in over $125 million of revenue to the general fund.
"My approach is to try to stay in front of potential pitfalls and be proactive," Governor Mead said. "What my office and other state agencies will do over the coming months is come up with a plan to ensure we are prepared if revenue decreases. This is how any business owner would act and it is in the best interest of the people of Wyoming."