- Associated Press - Friday, April 22, 2016

CHEYENNE, Wyo. (AP) - Wyoming state government agencies must implement sharp budget cuts in response to falling energy revenues, Gov. Matt Mead announced Friday.

State agencies must cut their spending by 8 percent below the $3 billion state budget lawmakers worked out earlier this year for the two-year spending cycle that begins in July, Mead announced Friday.

Mead spokesman David Bush said it’s unclear whether the cuts will result in state employee layoffs.

The cuts follow a state revenue update released Friday by the state’s Consensus Revenue Estimating Group - a panel of state financial experts who assess energy markets and other factors.

The update projects that revenues could fall up to $130 million below projections for the current fiscal year that runs through June. Such a maximum $130-million shortfall would represent about 9 percent of the total $1.44 billion total general fund/budget reserve account budget for the current fiscal year.

“If coal production declines further, if natural gas prices slide further after the completion of the winter withdrawal season, or if oil prices or production decline again in the next three months, the shortfall could be worse,” the report states.

Wyoming, the nation’s leading coal-producing state, imposes no personal or corporate income tax and relies heavily on taxes from energy production to fund state government. 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.

Mead issued a statement Friday saying he appreciates the Consensus Revenue Estimating Group’s work.

“Declining revenues are not unexpected and look to continue in the near future,” Mead stated. “I have asked state agencies to reduce general fund spending in budgets by 8 percent in preparing for the 2017 supplemental budgets.”

Mead for years has been decrying federal government regulations he says are hamstringing the state’s coal industry. The federal government last year announced a moratorium on new coal leases while Wyoming and other coal states have gone to court to challenge environmental regulations they say are aimed at shutting down coal-fired power plants.

State lawmakers are set to convene in Cheyenne in early 2017 for a general session. They will draft a supplemental budget bill to amend the $3-billion two-year budget they adopted in the session earlier this year.

House Speaker Rep. Kermit Brown, R-Laramie, said Friday that he and other top lawmakers have had preliminary discussions about budget cuts but haven’t had a formal briefing from the executive branch.

“The governor’s the chief executive officer of the state, and he’s got a lot of authority to act in those instances in which the revenues are not coming in as they were originally forecast to come in,” Brown said.

Brown said state agency directors will have to consider the effect of cuts they implement on federal matching funds.

A veteran legislator who has announced he’s not seeking re-election this year, Brown emphasized that lawmakers in recent years have saved state energy revenues in preparation for just such a downturn. He noted that the Legislature has faced criticism in recent years for amassing the state’s $1.8 billion “rainy day fund,” and other state savings.

“We’re going into a period of hard times here better equipped than this states ever been equipped,” Brown said.

“This state has been really poor and out of cash, and we’re far from that now,” Brown said. “And now everybody’s saying the sky’s falling in. They’ve never been here when the sky’s really fallen in.”

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