As the Appropriations Chairmen for the Wyoming Legislature, we have the challenging task of weighing our history, addressing the present, and planning for the future in the context of our current and projected fiscal outlook. This approach directed our development of the state’s budget bill being debated in the Wyoming House and Senate.
It is critical for Wyoming citizens to understand how the budget process works in light of the extraordinary volatility of energy markets and the challenges that creates in maintaining essential services Wyomingites rely on. Wyoming’s revenue model was developed nearly 50 years ago, capitalizing on our state’s vast energy resources. Under this model, nearly two-thirds of the revenues we raise from our tax structure comes directly or indirectly from the energy industry. The tax burden carried by Wyoming energy companies over the last half of a century has indeed created a legacy of prosperity for Wyoming citizens; however, the overreliance on this sector is problematic for our state given the rapidly changing energy landscape.
Our coal sector is producing half of the production it was thirteen years ago. Natural gas production has been steadily declining over the last decade. High energy prices have sustained revenue for the biennium but production and national demand are trending downward. When both low prices and reduced production meet, Wyoming will not be able to pay its bills.
Weighing these facts while continuing to push for a more efficient government that does more with less, the 2023-2024 budget is a balanced, conservative approach that delivers for the people of Wyoming. The proposed budget for traditional state resources of approximately $2.8 billion is dollar-for-dollar ten percent lower than a full decade ago – and that’s not considering inflation. Funding for education is essentially flat for school year 2022 and school year 2023. Wyoming has always placed a high priority on funding education for our children. Wyoming’s future lies with them and they are undoubtedly our most important investment. Sustaining our funding model and maintaining fiscal support for Wyoming’s children is one of the largest hurdles in front of us.
The 2023-2024 budget lives within our means while keeping an eye to the future. However, the federal COVID 19 relief funds and the American Rescue Plan Act (ARPA) dollars are a one-time opportunity to resolve the immediate effects of the pandemic in a way that helps Wyoming invest in its future. Since the start of the pandemic, Wyoming families, businesses, and state and local governments have received over eight billion dollars in various forms, from the Paycheck Protection Program (PPP) to bolster Wyoming businesses, to money for hospitals, mental health, and schools. Much of that funding also went directly into communities to help with immediate relief from the pandemic. The Appropriation Committee in two separate bills appropriated approximately $1 billon in ARPA funds. The funds were strategically distributed into savings, immediate and long-term investments. We are now looking at how to smartly use the remaining $463 million one-time ARPA direct dollars to meet current needs and to continue creating dividends for future Wyoming generations.
ARPA funding was and is critical to providing much needed relief to Wyoming’s businesses and communities. In addition to that important effort, we have been laser-focused on opportunities to invest in and shape our future, keeping Wyoming at the forefront of the energy frontier. Wyoming is working to land two pilot project opportunities with the U.S. Department of Energy – one is a hydrogen hub to create hydrogen fuel out of natural gas in southwest Wyoming. The other project in sight is a large carbon capture and storage facility. Either of these innovative initiatives could be game-changers for Wyoming’s energy industry and for the transition to other energy uses. This is why the Appropriations Committee set aside $100 million as a match for federal funds should the federal government greenlight these innovative projects. The Committee also set aside $10 million to help extend existing jobs and coal production at two Wyoming coal mines.
In an effort to continue to build for the future, the Joint Appropriations Committee is developing an endowment model for the state’s sovereign wealth funds. To accomplish this, over the past decade, the Legislature, Treasurer’s office and Governor’s offices have continued to refine how we can obtain better returns without additional risk. This enhances the purposes that the permanent funds were intended to do - take a portion of revenue to generate more money for the state without raising taxes. That effort has resulted in our permanent funds generating the third largest source of revenue for our state government. If we can grow our permanent funds $150-200 million more, we get that much closer to increasing the stability of state revenues.
With these strategies, the Wyoming Legislature maintains the state’s incredible legacy of utilizing its energy-rich resources to better address Wyoming’s immediate needs, but also looks forward to building a brighter future for the people of Wyoming.
Senator Drew Perkins (SD-29) is the Chair of the Senate Appropriations Committee. Representative Bob Nicholas (HD-08) is the Chair of the House Appropriations Committee.
