Friday, July 17, 2020

Wyoming budget hammered by coal decline, pandemic-spurred drop in oil and gas production and prices

Coal production and jobs have been declining for years, hurting local economies that depend on it. Meanwhile, the pandemic triggered a worldwide drop in energy demand, which meant bottoming out oil and gas production and prices. At the epicenter of both trends sits Wyoming.

"The state, one of the nation’s least populated and most politically conservative, is bracing for a sharp drop in revenues over the coming two years as the coronavirus continues to disrupt the nation’s economy and as oil and gas production and coal mining in the state falter. Wyoming depends heavily on those industrial and energy sectors to fuel the state’s budget," Bill Lucia reports for Route Fifty. "Wyoming’s financial health has for years been deeply intertwined with how the mining and oil and gas industries are performing. The state collects not only severance taxes on fossil fuel production, but also revenues like mineral royalties from production on in-state federal lands and sales and use taxes that flow from the energy sector."

Right now, minerals are directly responsible for about two-thirds of the state's revenue. The state's Republican governor, Mark Gordon, said at a press conference Wednesday that one-third of the state's income is gone, that he has no way to raise revenue, and that he must make cuts in order to balance the budget, Lucia reports. He rejected a suggestion that the state could dip into its rainy day fund: "That might last for about a year, and then we have nothing to fall back on."

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