The Wyoming Consensus Revenue Estimating Group (CREG) released its latest revenue forecast today. This is the first update from CREG since January when the group lowered forecasts for the price of natural gas. Natural gas is the single largest source of revenue for the State of Wyoming and as a result of that forecast Governor Matt Mead asked state agencies to prepare budget cuts of up to 8%. Today's revenue forecast did not lower natural gas prices again but did lower estimates for the production of natural gas and coal.
"First and foremost this forecast from the Consensus Revenue Estimating Group is a reminder of how important minerals are to Wyoming's economy," Governor Mead said. "I also believe this report shows we need to continue to be cautious with our spending and try to further streamline state government. I appreciate my cabinet working hard this year to come up with plans to reduce budgets. Those cuts are still on the table."
The CREG estimated the revenue for fiscal years 2013 and 2014 are up $85 million from January, but that figure is still more than $30 million behind the forecast from one year ago. "If we do not reduce ongoing spending, then the state could soon outspend its revenue," Governor Mead said.
The biggest increase in actual income compared to the projection for fiscal year 2012, which ended June 30th, was capital gains income from investments. Capital gains are not part of the revenue estimating process. Governor Mead said, "Excluding capital gains income estimates means we have a harder time accurately gauging how much revenue the state will receive in a given year. If a major revenue stream, such as investment income, is significantly underestimated it unnecessarily limits the planning process for that revenue."
"We in the executive branch are preparing budget cuts and figuring out ways to pay for big ticket items like fighting wildfires, the Gillette-Madison water project and assistance to local governments for issues involving aging landfills. Whether we should continue to put all of this 1% of revenue into permanent savings or whether now is a time to use that revenue for one-time large projects is a worthwhile discussion." Governor Mead said. This is in the context of the possible loss of $700 million over the next ten years in Abandoned Mine Land funds that the state was promised.
"We are still in a strong place, in terms of our ability to avoid dipping into savings. But, we should have the discussion about whether we want to build savings at the same rate as we did during the boom times," Governor Mead said.
Governor Mead will release his proposed supplemental budget by December 1, 2012.