Wyoming is having stronger revenues than expected this year.
Still, Gov. Mark Gordon is urging caution with spending in the face of falling natural gas prices and volumes, strains on the state’s mineral industries and COVID-19 relief dollars that are winding down.
The latest Consensus Revenue Estimating Group report shows total revenue collections for the general fund and the budget reserve account — the state’s two checking accounts — exceed the group’s January forecast by about $176 million, or 11.1%.
Sales and use taxes, the largest revenue stream for the state’s general fund, are exceeding forecasts by about $30 million, or 5%, owing to inflation, rebounding mineral extraction and continued consumer spending.
Almost every major industrial sector had an increase in sales and use tax collections compared to fiscal year 2022, the report says. With a 55.8% increase, the mining industry had the largest growth in sales tax collections. That’s because there’s been a continued rebound in mining exploration activities, the report says. But the amount collected by the industry is still 14.8% lower than in fiscal year 2019.
Sales tax collections from the utilities sector also grew 32.7% because of increased activity in wind power projects and a general rate increase in utility gas service.
All but one county saw an increase in collections, with Converse County leading with a 42.6% increase. Teton County was the only with a slight decrease (-0.1%).
Wyoming oil production is steady with the forecast level. But prices have trended steadily downward since last summer because of more inventory, weakening global economic conditions and U.S. economic uncertainty. Oil prices are approaching the lowest levels in almost three years, and the report predicts that prices will likely lag behind forecasts.
Natural gas prices have also dropped this winter and spring because of a large supply but weak demand, though severe winter weather in western states buoyed regional prices to unprecedented levels for a couple of months.
U.S. power generation from coal continued to decline steeply. But Wyoming surface coal prices this fiscal year are a little higher than last year’s and in line with forecasts as producers try to meet pre-existing contractual obligations, the report says.
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Though income for the state continues to outpace forecasts, Gordon cautioned in a Friday statement that dropping natural gas prices and strains on Wyoming’s legacy mineral industries could reverse strong revenues.
He also noted that in the next budget, the state will have to restore $330 million to maintain existing government services that American Rescue Plan Act dollars currently pay for. ARPA funding has to be allocated by the end of 2024 and spent by the end of 2026.
“This examination of recent revenues also shows gathering storm clouds on the horizon that could signal a change in Wyoming’s future revenues,” he said.
“For the upcoming biennium budget, we must recognize the potential of future challenges and be realistic in our assessment of our ongoing financial picture. We should appreciate that Wyoming has been conservative with the windfalls that have come our way in recent years. We must continue to be vigilant in our ongoing spending.”
Gordon will release his next two-year budget proposal in November.