Wyoming Gov. Matt Mead warned his state agencies to prepare for making 8% cuts in their budgets in response to a dwindling revenue stream due to inordinately low natural gas prices. The average expected gas prices since the new budget was calculated in January have plummeted to below $2/MMcf, compared to $3.25/MMcf.
Natural gas production provides the single largest source of revenue to the state, and Wyoming’s budget analysts have forecast future revenue on the basis of $3.25 average gas prices, but the price is currently at a 10-year low of under $2. Something obviously has to give. “If this lower price holds through the end of this year, it could mean a reduction of more than $125 million of revenue to the general fund,” a spokesperson for Mead said.
The 8% cuts would result in knocking out $74.5 million from the fiscal 2014 budget, which starts July 1, 2013. Mead also asked for an immediate cap on filling of vacant staff positions to cut spending immediately.
In the state’s current budget the legislature and Mead directed state agencies to prepare cuts to their fiscal 2013-2014 budget of 4%. With gas prices slipping much lower than previously accounted for, the governor has asked the agencies to prepare for 8% reductions.
In addition to asking agencies to prepare for cuts by the end of this calendar year, state lawmakers also asked agencies to prepare cuts of 8% for the next two years.
“This year I submitted a budget that held ongoing spending flat, but looking ahead, we need to be ready to reduce our spending in line with anticipated reductions in revenue,” Mead said. “If we see a turnaround and revenue increases, we may not have to make deep cuts going forward, but this advance planning allows for a more surgical approach if a reduction in spending is needed.
“What my office and other state agencies will do over the coming months is come up with a plan to ensure we are prepared if revenue decreases. This is how any business owner would act, and it is in the best interest of the people of Wyoming.”
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