Declining coal production will cut Wyoming school funding

By Ben Neary, Associated Press

Falling demand for coal means funding for Wyoming school construction is drying up, state financial analysts told lawmakers on Friday.

CHEYENNE, Wyo. (AP) — Falling demand for coal means funding for Wyoming school construction is drying up, state financial analysts told lawmakers on Friday.

Wyoming has directed billions in bonus funds from the sale of federal coal leases to support state school construction in recent decades.

However, demand for coal has been falling nationwide recently in response to low natural gas prices and stiffer federal emissions regulations on coal-fired power plants. Analysts are warning that the days of hefty coal lease bonus checks are likely over.

Analysts with the state's non-partisan Legislative Service Office briefed members of the state's Joint Revenue Committee Friday.

Don Richards, LSO budget and fiscal administrator, said that in the two-year funding cycle that covered 2013-14, the state's School Capital Construction Account received $736 million. He said the current estimate for the 2019-2020 funding cycle is just $26 million.

"Is that a guarantee? Absolutely not," Richards said. "Coal prices could double, oil prices could double, natural gas prices could double from where they are today. Those would certainly revise our projections from where we are going forward."

The state's Consensus Revenue Estimating Group, a team of state financial experts of which Richards is a co-chairman, released its annual report last month. The group projected that the state's general fund revenues will drop from nearly $3.5 billion in the two-year funding cycle, called a biennium, that runs through next June to just under $3 billion for the following biennium, covering fiscal years 2017-2018.

In early October, anticipating the bleak CREG report, Gov. Matt Mead announced that he was imposing a freeze on state hiring and ordering state department directors to review their budgets to look for ways to save.

Senate President Phil Nicholas, R-Laramie, urged members of the Revenue Committee on Friday to consider sponsoring legislation in the budget session that starts in February to increase taxes to begin to cover the school construction shortfall.

"If we think that we're going to wait five years and then we're going to pay the bill, there aren't enough people, unless we go to an income tax, there aren't enough people in Wyoming who pay taxes" to cover it, Nicholas told the committee. He said the state's best course would be to act fast to enact sales tax or property tax increases.

Rep. Tom Reeder, R-Casper, said he objected to considering tax increases when the state had known for years of the impending drop in coal revenues.

Reeder said he would support any tax increases until the state starts using a model school approach, in which each school would use the same design to reduce design costs.

"We need to be a little bit more frugal and make some decisions about what we're doing right now," Reeder said. "I haven't heard anything about cuts, about how we can do things differently and more efficient. All I hear is we need more money to fill this hole."

Sen. Ogden Driskill, R-Devils Tower, said he agreed with Reeder. He said that, as of last year, all the states surrounding Wyoming spent just over $9,000 per student per year, while Wyoming spent roughly $15,000.

"We need to run our state government much closer to a business," Driskill said.

The committee plans to consider tax increase options after next legislative session.

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