CHEYENNE, Wyo. — Wyoming Gov. Matt Mead said Wednesday that he is alerting state agency directors to brace for further budget cuts in the face of falling revenues.
Mead early this summer cut roughly $250 million from the $3-billion state general fund budget legislators approved earlier this year.
He told The Associated Press in an interview it’s not yet clear how much more agency directors will still have to cut in the two-year budget cycle that started in July.
“I am letting them know there is a real possibility the Legislature may require additional cuts,” Mead said.
State agencies will not be allowed to make supplemental funding requests in the legislative session starting early next year except in emergency cases, he said.
Earlier budget cuts were at the low end of the budget shortfall of $250 million to $500 million that state analysts announced this spring.
State financial experts with the Consensus Revenue Estimating Group will update their formal state revenue estimates in October.
Meanwhile, interim revenue reports show Wyoming state revenue has continued to fall since the last formal revenue forecast in January.
CREG will issue its next revenue estimate report in October but Mead said agency budget cuts will not be imposed until the Legislature convenes at the beginning of 2017.
In a revenue update last month, CREG said that while coal prices have remained in line with a January forecast of $13.50 a ton, production in Wyoming is falling.
The state is the top U.S. coal-producing state and surface coal production dropped from 91 million tons the last three months of 2015 to 65 million tons in the first three months of 2016.
Federal figures compiled by the U.S. Energy Information Administration show Wyoming produced 170 million tons of coal this year through Aug. 13. That’s down from 231 million tons for the same period last year.
CREG had forecast that Wyoming would produce about 365 million tons of coal this year.
At the current rate of production, however, officials say the state is on track to fall about 100 million tons short of what was expected. If production remains at that level over the two-year budget cycle, state revenues would come in about $100 million a year below January’s projections.
Several large coal companies have sought bankruptcy protection in recent months and Wyoming has seen sizeable layoffs among miners working in the Powder River Basin.
“We’re seeing a real realignment in the global coal industry right now,” said Travis Deti, assistant director of the Wyoming Mining Association. “And while I wouldn’t go as far as to say things are looking up, I think it’s fair to say that we’re starting to see some stabilization.”
Several lawmakers said it is obvious that the state will be forced to make more budget cuts when the Legislature convenes early next year.
“Things are not shaping up well, you don’t have to be a rocket scientist to know that,” said Sen. Tony Ross, R-Cheyenne, the chairman of the Senate Appropriations Committee.
Ross said the state faces a shortfall of about $150 million for the two-year budget cycle that ended in June, “and that hole’s got to be filled.”
Sen. Bruce Burns, R-Sheridan, another Senate Appropriations Committee member, said “the budget we put out from this last session was just the beginning of cuts.”