Editorial Board: Revenue forecasting represents an opportunity for the state. Will we take it? | Editorial
STAR-TRIBUNE EDITORIAL BOARD
Wyoming’s financial outlook continues to improve. A year ago, in the face of declining energy and the COVID-19 pandemic, our leaders were forced to make major cuts to the state budget, cutting services and laying off workers for the first time since the 1980s. Looking to the future, it seemed that there would be little respite from economic hardships given the struggles over coal and the challenges facing fossil fuels.
But in 2021, Wyoming’s fiscal outlook has improved significantly. Nationally, the economy is recovering from pandemic losses, and our state is no exception. People are traveling again and visiting our state in record numbers. But more importantly for our economic fortunes, the prices of oil and gas have risen dramatically. Oil prices briefly turned negative last year and Wyoming’s drilling rig count fell to zero. Now a barrel of crude is trading at nearly $ 80, and Wyoming’s drilling rig numbers have returned to their teens. The prices of natural gas, meanwhile, have almost doubled.
The result is a rosy prospect – in the short term, at least. The state panel responsible for projecting Wyoming’s future income – the Consensus Revenue Estimating Group – released its latest findings in October. The group now expects the state to receive an additional $ 600 million over the next three fiscal years.
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This is not all good news. Wyoming received $ 1.2 billion as part of the US bailout stimulus package signed earlier this year. The state has until the end of 2024 to decide how these funds are spent, and then has another two years after that to actually spend them.
In short, the state has a ton of money. The question then becomes: how are we going to spend it?
At present, we have seen little leadership on this issue. Governor Mark Gordon has described very broad features, but so far details have been scarce. As we’ve written before, while there has been little public discussion of how to spend all that money, it’s certainly on the minds of lawmakers and other heads of state. Plans are likely to be made out of public view, that is, without public input.
We are also concerned about how this revenue will be used. There is a tendency, when you have plenty of money, to address immediate concerns. Or worse yet, ignore the realities of our long-term economic situation. It’s easy to fall victim to the fallacy that good times will always be good. But we know that changes are happening in the way our country produces and uses electricity. And while we currently benefit from high natural gas and oil prices, these structural changes mean we can no longer rely on traditional energy sources to pay for utilities as they once did.
So, as heads of state decide what to do with this money, it is not enough to just ask, “How are we going to spend it?” Instead, the critical questions are: will this spending help us 10 years from now? Will it make a difference to our fortunes in the long run?
We don’t want to waste this opportunity. And really, Wyoming can’t afford it. The commodity markets treat our state well, but too often we’ve seen what happens when they don’t. We have enjoyed good fortune lately enough to give us the chance to put our state on a long-term sustainable basis. We have to be wise now if we are to realize its full potential later.