Gordon predicts more budget cuts
October 10, 2019
CASPER — With a month until his administration releases its first budget, Gov. Mark Gordon said all ideas to trim spending are on the table in 2020, explaining that Wyoming appears to be entering “a new period” in its history as the outlook for fossil fuels as the state’s primary economic driver grows increasingly grim.
In a conference call with reporters Tuesday afternoon, Gordon said that he anticipates a number of cuts to be included in his proposed budget, setting the stage for a major funding debate in a Legislature still smarting from massive reductions in spending two years ago.
“I think it’s going to be a tough budget,” Gordon said. “My view is that people in Wyoming are wanting to make sure we have looked fully at every opportunity we have to reduce our government spending before we start talking about any taxes.”
“From my standpoint, I’m willing to look at everything,” he added.
A fiscal conservative, Gordon has stressed improving government efficiency as an overriding theme of this year’s budget, urging each department in state government to evaluate what it could do to streamline operations and cut costs in a way that has as little impact on taxpayers as possible.
While Gordon does believe that the numbers for the next two years will present some challenges, he was reluctant to speculate on what sort of deficit the state will face, particularly with the October report from the Consensus Revenue Estimating Group still two weeks from release.
“We have reason to believe coal volumes are still pretty high, so we don’t necessarily anticipate seeing as serious a decline as we might have expected with all the bankruptcies and so on,” he said.
In the long-term, however, the state’s revenue picture is bleak. Throughout the summer, the Wyoming Legislature’s Joint Committee on Revenue has been working to find ways to broaden the state’s revenue streams, so far balking at all but the smallest solutions. At the same time, Gordon’s Energy Futures Modeling Group has submitted a number of pessimistic early scenarios for the state’s revenue outlook in the future, leaving him to contemplate just how much longer the barrage of negativity from fossil fuel wary states like Oregon and Washington can last.
“It’s my view that we are entering a new period in our state’s history, and as that fully matures, we get a better understanding how long-standing these pushes for renewable energy are and how that affects things like our revenue picture,” Gordon said.
But even the low-earning bills that have survived the summer weren’t regarded warmly by the governor, who has long been opposed to any tax increases. Throughout Tuesday’s presser, Gordon was reluctant to endorse a number of revenue-raising proposals working their way through the Legislature, including a corporate income tax and an increase to the gas tax – a small solution to addressing part of a massive, multi-million dollar shortfall facing the Wyoming Department of Transportation.
Instead, Gordon stuck to a tune similar to the one he ran on as a candidate: the need to “live within our means.”
“We’re not going to go crazy on trying to find revenue to fix all of that,” Gordon said. “Part of the conversation has to be how we prioritize the roads, and how people in Wyoming understand what we won’t be able to do before we start talking about raising taxes.”
“I really favor a comprehensive look at what our future in Wyoming looks like, and that our citizenry has a chance to weigh in on it,” he added.
At the same time, Gordon is still looking to find a medium between raising the revenues the state needs without new taxes while, simultaneously, ensuring the bottom remains intact on an energy industry that is finding itself increasingly in peril.
Throughout the press conference, Gordon teeter-tottered between maintaining his promise to preserve a business-friendly environment while also keeping mineral revenue streaming into Wyoming’s coffers. Citing the tens of millions of unpaid taxes left behind the bankruptcy of coal operator Blackjewel, Gordon underlined the need to overhaul the way the state collects its ad valorem, or mineral production, taxes.
“I think we absolutely have to do something on ad valorem taxes ... I’m certainly in favor,” he said.
At the Legislature’s committee meeting on coal bankruptcies Monday, lawmakers considered reviving a 2016 bill that required coal companies to pay mandatory mineral production taxes to counties on a monthly basis. The proposed bill mirrors the model for collecting state severance taxes. The annual tax payment plan in place enables struggling coal companies to fall behind on the payment, advocates of the proposed bill reasoned.
Blackjewel filed for Chapter 11 bankruptcy on July 1 with tens of millions of dollars in unpaid production taxes owed to Campbell County. This month, Campbell County approved the terms of the sale of the two mines, but will only hold the new company liable for half of the unpaid production taxes left by Blackjewel. The sale has yet to close.
The insolvent company operates Wyoming’s Eagle Butte and Belle Ayr mines, but plans to sell the mines to a new company, Eagle Specialty Materials, a sale Gordon said he remains “very optimistic that the two closed coal mines in Campbell County are on the verge of being reopened.”
Gordon also stood firm in his support for a recent rule proposed by the Bureau of Land Management that could reduce royalty rates for the extraction of non-energy minerals, on soda ash, on federal land checkered throughout the state. The rule change could hand operators a 2 percent break on federal taxes.
About 48 percent of federal royalties flow back to Wyoming and critics of the new rule have pointed to the loss of revenue from companies who mine public land.