Report: Up to $1.5 billion Wyoming revenue hit amid COVID-19
CASPER, Wyo. (AP) — Collapsing energy prices and the COVID-19 pandemic are expected to cost Wyoming up to $1.5 billion in revenue over the next two years, preliminary estimates released Tuesday show.
The nonpartisan state Consensus Revenue Estimating Group predicts sales tax revenue will fall up to 30% in the 2021 fiscal year that begins July 1.
That alone would yield an $877 million state general fund shortfall over the next two years — equivalent to the entire state government payroll or all spending on public education, state Budget Director Don Richards said in a report to the Legislature’s Joint Revenue Committee.
Double-digit declines in both sales tax and mineral revenue will meanwhile cause the state to exhaust its savings well before the next biennial budget just approved by lawmakers in March runs its course in 2022, Richards said.
“The current path is not sustainable,” Richards said.
Even before the pandemic, the state was struggling with reduced state revenue from the coal, oil and natural gas industries.
Now, in addition to less revenue from business activity statewide, revenue is suffering from low oil prices caused by an international price war and from diminished demand for electricity. Oil drilling is down and mines supplying coal to power plants are cutting back and laying off hundreds.
“We’ve been talking about making tough decisions for a very long time,” Senate Revenue Committee Chairman Cale Case, a Republican from Lander, said Tuesday. “It’s time to start thinking about making these tough decisions moving forward.”
The new estimates are based on many uncertainties including public health and economic considerations, consumer behavior and monetary policy that could potentially make matters worse, Richards said.
For example, the estimates don’t account for delayed or reduced tax payments by struggling energy companies or additional federal mineral royalty reprieves for such companies, the Casper Star-Tribune reports.
Other factors including the state’s second-biggest industry, tourism, also remain question marks, said state Director of Revenue Dan Noble.
“We have no idea what the impact on tourism is going to be this coming summer,” Noble said.
Wyoming is among seven states with no state income tax. Possible solutions to balance the budget include massive cuts in spending, dipping into savings and tax increases at a scale no previous Legislature has ever discussed, Richards said.
No single solution, Richards wrote, will solve the problem.
“Addressing this with any single lever has any challenges of its own,” he said.