- Associated Press - Sunday, January 3, 2016

CHEYENNE, Wyo. (AP) - Wyoming lawmakers are bracing for what promises to a bruising budget session starting in February.

Ousted from their traditional digs at the state Capitol by an ongoing renovation project, lawmakers will be crammed into a retrofitted Cheyenne office building as they draw up the state budget. The main dilemma: Funding operations for the next two years even as cratering energy prices diminish the amount of money available to the state.

“Number one is the budget,” said House Speaker Kermit Brown, R-Laramie. “And it’s a monster, and there’s going to be a lot of arguing about that.”

Despite Wyoming’s projected declines in energy revenue, there’s little support for hiking taxes. But some lawmakers predict the state may have to consider doing so soon.

Don Richards, the Legislative Service Office’s budget and fiscal administrator, recently told state lawmakers that Wyoming’s School Capital Construction Account, which relies on coal lease bonus funds, received $736 million in the two-year funding cycle that covered 2013-14. He warned that the current estimate for the 2019-2020 funding cycle is just $26 million.

So far, lawmakers haven’t said how they intend to address the expected disappearance of that money. The Joint Revenue Committee recently shot down a suggestion from Senate President Phil Nicholas, R-Laramie, that the Legislature consider property tax increases ahead of the looming shortfall.

The Legislature’s Joint Appropriations Committee started hearings in December on Mead’s proposed $3.4-billion general funds budget for the two-year cycle beginning in July 2016. That represents a budget $200 million smaller than in the current two-year cycle.

There are two major issues: How to move money around to deal with the shortfall in energy revenues, and the Republican governor’s desire to expand Medicare under President Obama’s health care law.

For the second year, Mead’s budget proposal calls for Wyoming to accept federal funds to expand the federal Medicaid program - a move that could provide subsidized insurance coverage for roughly 20,000 working poor in the state. Medicaid expansion is a fundamental element of the federal Affordable Care Act.

Wyoming’s GOP-controlled legislature last year rejected Medicaid expansion, with many Republicans saying they don’t trust federal promises to maintain scheduled payments of more than $100 million a year.

House Speaker Brown said Medicaid expansion is sure to get a hearing, but said he wasn’t making any predictions whether it will pass. “That’s going to be a rodeo,” he said.

Potentially even more disruptive is the energy situation, which could get even worse as state funds dry up faster than expected. For now, Mead is calling for no state employee pay raises and proposes to reduce the flow of money into permanent savings. He proposes borrowing from the state’s $1.8 billion “rainy day” fund to pay for state projects until more energy revenues come in.

A new report on from the Consensus Revenue Estimating Group could paint an even more dire picture in mid-January, just ahead of the scheduled Feb. 8 start of the budget session in Cheyenne.

“I think some of us, including myself, are just kind of holding our breath waiting to see if CREG’s going to be even lower its projections,” said Sen. Tony Ross, R-Cheyenne, chairman of the Senate Appropriations Committee.

Ross also serves as chairman of the committee overseeing the ongoing, $300-million renovation of the historic state Capitol in Cheyenne. The construction project forced lawmakers to move into temporary quarters.

Ross said he’s already heard from some lawmakers who question whether the state ought to move forward with the Capitol renovation in such tight budget times. But considering how much the state has spent already, he said he believes it would be imprudent to stop now.

Sen. Chris Rothfuss, D-Laramie, is Senate minority floor leader. He also said he believes Mead’s suggested approach to the budget is a good one.

“The aspect of it that I appreciate the most is that there’s no panic,” Rothfuss said. He said it recognizes that the state has substantial cash reserves in its rainy day fund and has revenues available by redirecting money that’s currently going into permanent savings.

House Minority Floor Leader Rep. Mary Throne, D-Cheyenne, said lawmakers need to begin to consider how the state will find new revenues to cover the expected downturn in energy revenues in coming years.

“I think we ought to explore our options now, and if things turn around in two or three years and we don’t need them, fine. But at least we’ll be prepared,” Throne said.

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