- Associated Press - Monday, February 8, 2016

CHEYENNE, Wyo. (AP) - Despite the downturn in energy prices, Wyoming remains strong and must invest in infrastructure projects and accept federal funds to expand Medicaid to keep moving forward, Gov. Matt Mead told lawmakers in his state of the state address Monday.

Mead, a Republican in his second term, said it’s important to respect the budget recommendations of the Legislature’s Joint Appropriations Committee, which is calling for across-the-board cuts to nearly all state agencies over the next two years.

However, Mead said he stands behind his own recommended budget that calls for taking roughly $450 million more from the state’s $1.8 billion “rainy day fund” to avoid cutting government services.

He proposed refilling the fund over the coming two-year budget cycle by reducing the flow of state mineral revenue into permanent savings.

“I’m confident that the people we are here to serve will accept the tough reductions that are needed,” Mead said in his 51-minute address in Cheyenne. “They will be less accepting about the loss of senior programs or a sewer system in their town while we continue to build up the largest relative rainy day fund in the country as if it is not raining.”

The current two-year state general fund budget is about $3.5 billion.

Mead also hammered on the need to accept federal funds to expand the Medicaid program, a move that would offer health insurance coverage to some 20,000 low-income adults in the state.

Expanding the program is a key element of the federal Affordable Care Act, which congressional Republicans have tried unsuccessfully to repeal in recent years.

Many Wyoming lawmakers say they don’t trust federal promises to keep funding the program. The Joint Appropriations Committee has voted against expansion.

Mead opposed the Affordable Care Act in his first term in office and steered Wyoming into a multi-state legal challenge that led to the U.S. Supreme Court upholding most of the law.

In recent years, however, Mead has emphasized that Wyoming can’t afford to turn its back on available federal funding only to see it go to other states.

In addition to providing health care, Mead said accepting federal Medicaid funds would help Wyoming hospitals avoid getting stuck providing uncompensated care and would inject hundreds of millions of dollars into the state economy.

“It’s not fair to Wyoming to leave these problems unaddressed - to suggest the solution is going to be a new administration in D.C. that will fix it all,” Mead said. “From where I sit, it could get worse, depending on who the next president is.”

Mead also said he will fight for the state’s beleaguered coal industry.

“Wyoming is, and will proudly remain, the energy producer for the rest of the country,” he said. “It’s a wonderful thing.”

Many major coal companies are in financial trouble and some with mines in Wyoming’s Powder River Basin have declared bankruptcy. The federal government, meanwhile, recently announced a moratorium on new coal leases.

State financial analysts recently warned that state revenue from federal coal leases are likely to fall from nearly $740 million in the two-year state funding cycle that covered 2013-14 to just $26 million in 2019-2020.

Wyoming has used federal coal lease bonus payments to fund school construction.

Mead told lawmakers the disappearance of federal coal lease bonus payments is one of the biggest financial challenges facing the state. The Legislature will have to address how to cover some $600 million in school construction expenses that until recently was covered by coal revenues.

House Minority Floor Leader Rep. Mary Throne, D-Cheyenne, said she and other Democrats agree with many of Mead’s points.

“We appreciated his strong message on Medicaid expansion, and also on emphasizing the need to prioritize people over buildings,” Throne said.

Republicans in the Legislature outnumber Democrats 77-to-13.

House Speaker Kermit Brown, R-Laramie, said Mead has some differences with lawmakers on budget issues.

“But as he said in his message, which I absolutely agree with, we’re all focused on the same thing, which is what’s best for the people of the state of Wyoming, and we’ll get it worked out,” Brown said.

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