Wyoming Governor Floats 10% Cut as Natural Gas Prices Tank

SAN FRANCISCO — Wyoming Gov. Dave Freudenthal this week proposed a 10% cut in spending in the upcoming biennium, as the least populous U.S. state adjusts to lower natural gas prices.

Under Freudenthal’s plan, general fund spending would decline to $3 billion in the 2011-12 biennium that begins July 1 from $3.3 billion in the 2009-10 biennium.

The budget includes sharp cuts to local government aid, no cost-of-living adjustments for state workers, and no inflation adjustment for education.

The budget maintains the state’s $693 million legislative stabilization reserve fund.

The Democratic governor said he didn’t recommend spending the money because he is uncertain if the economic downturn will drag on and leave the state in need of the funds later.

“I think that there is a higher probability of a very slow recovery than there is a probability of a robust recovery, in Wyoming,” Freudenthal said.

Wyoming was initially less hard hit by the economic downturn than other parts of the country due to its booming energy sector, but natural gas prices — a major revenue driver for the state — have fallen about 70% since July 2008, forcing reductions in revenue estimates.

Projected revenue has fallen by $1.9 billion since October 2008, the governor said. In June, Freudenthal reduced state appropriations for the current fiscal year by $232 million because of falling revenue.

Under the new budget, local governments would see state aid decline by more than half, to $170 million from $400 million. The state would slash spending on highways to $50 million from $200 million.

“We’ve been living on a champagne budget,” Freudenthal said. “And now what we can really afford is soda pop. But that’s a lot more than a lot of other states.”

Wyoming is in a better position than other states because it saved much of its windfall from rising energy prices in recent years, the governor said.

The state has almost no debt outstanding, reporting just $41 million of general government bonds payable in its 2008 comprehensive annual financial report.

In addition to the legislative stabilization reserve fund, Wyoming has $4.2 billion in its permanent mineral trust fund and $1.7 billion in its common school land fund as of October.

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Wyoming
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