Mead working with state agencies on budget cuts

CHEYENNE, Wyo. (AP) — Wyoming Gov. Matt Mead said Monday he will meet this week with the directors of the largest state agencies to address how to implement budget cuts he’s ordered in response to falling energy revenues.

Mead told The Associated Press that reductions in state agency workforces are possible, but he said they haven’t been determined.

“We want to be on certain ground on a process going forward before we sent out any sort of notice on what we’re doing,” he said.

Mead announced last week that he’s directed state agencies to cut their budgets by 8 percent for the two-year funding cycle starting in July. The reductions will cut spending below the $3 billion state budget that lawmakers worked out earlier this year.

State financial experts predict that energy revenues could fall up to $130 million below projections for the current fiscal year that runs through June. Such a shortfall would represent about 9 percent of the total $1.44 billion total general fund/budget reserve account budget for the current fiscal year.

Similar shortfalls also are likely in both years of the coming biennium.

By current estimates, Mead said he expects the state needs to cut $300 million or more over the next two years.

Mead said reducing programs could have an effect on overall state employment.

“But as always, I don’t believe you’re going to make up this difference by just laying people off,” he said. “I think you have to look at how you spend so much of your money and that’s in programs.”

Wyoming relies heavily on taxes from energy production to fund state government. However, the state has seen widespread energy industry layoffs this year as major coal companies have sought bankruptcy protection and prices in other energy markets have remained low.

The budget that lawmakers approved earlier this year includes hundreds of millions of dollars for state capital construction projects over the next two years. Mead said he’s talked with legislative leaders about the state’s financial picture and said Republicans generally support continuing with the construction spending while Democrats would put it on hold.

Mead said he’s asked the Wyoming Attorney General’s Office to research his authority to make budget changes. “We’re going to look at everything to see how to best go about this, with causing the least amount of disruption as possible,” he said.

Asked about the possibility of tax increases to make up the shortfall, Mead said taxes would hit the state’s mineral industries the hardest. He said the place to start, “is to see how we can do on the cut end before we have that discussion on taxes.”

Sen. Drew Perkins, R-Casper, serves on the Senate Appropriations Committee. He said Monday that it could be necessary to cut state spending as much as 12 percent in response to falling revenues.

House Minority Floor Leader Rep. Mary Throne, D-Cheyenne, said she doesn’t believe that 8 percent cuts to state agency budgets are feasible.

“What would make more sense is to reevaluate a lot of the capital construction projects, put those on hold and divert that revenue,” she said.

But Senate President Phil Nicholas, R-Laramie, said he sees no way around cutting state agency budgets.

“When you begin to look at this type of deficit, then your big agencies are going to have to bear the biggest load,” Nicholas said. “As you know, the big ones are Corrections, Health, (the University of Wyoming), community colleges.”

As the state considers spending cuts, Nicholas said it’s critical the state continue to invest in its infrastructure and education so it doesn’t fall behind other states in attracting new businesses and industries.