Governor instructs state agencies to prepare deeper budget reductions
June 4, 2020
CHEYENNE, Wyo. – In response to Wyoming’s significant revenue shortfalls, Governor Mark Gordon has instructed state agencies to immediately take action to further reduce spending and prepare for deeper cuts in the coming months. The reduction plan requires agencies to prepare for more drastic scenarios and be proactive, since the revenue situation could further worsen. Already the state has taken the first step by imposing a hiring freeze and limiting large contracts.
“We are in uncharted territory,” Governor Gordon said. “We have just experienced the largest loss of income in our history just four years after our second largest loss of income. But, even if every state employee was let go, or if we closed the prisons, eliminated all money going to the courts, and stopped funding persons with disabilities, we would still run out of funds at the end of the biennium.”
The Governor is building a broad response plan to address this budget crisis. For spending reductions, he outlined a phased plan to be coordinated closely with the legislative branch. The next step requires state agency directors to identify and explain programs to eliminate by July 1, along with the consequences of those proposals. These cuts will likely lead to some employees losing their jobs. He also asked agencies to consider salary reductions, furloughs, reductions in benefits, and other options.
The subsequent step involves preparing for the unknown, with each agency building flexible approaches that are responsive to updated revenue forecasts that will be issued by the Consensus Revenue Estimating Group (CREG) in July and October.
“Wyoming depends on energy production to fund its government and has for decades,” the Governor said. “ But our coal revenues are down 25 percent and will continue to decline. Projected oil revenues have dropped more than 50 percent in three months. Gas is selling for 1970-level prices and there is no new production. Compounding this, sales tax revenues (also largely driven by mineral development) are in steep decline.”
“To be sure, the data that we used to model these revenue shortfalls are preliminary, and therefore still a bit unclear, but there can be no doubt we will see a continuing steep decline.” the Governor said. “In any event, our approach to the significant cuts we will have to make must be done strategically, with purpose, and in a manner that assures Wyoming can recover rapidly.”
The Governor reaffirmed the entirety of the response will build on his commitment to working with the Legislature to look for other ways to fund an appropriate level of government services, including the short-term use of the Legislative Stabilization Reserve Account (LSRA), the Special Investment and Projects Account (SIPA), or revenue enhancements, since merely cutting services will not be enough to address the scope of the shortfall.