by nathan oster
Gov. Matt Mead assured a gathering of public officials Monday in Greybull that the dire revenue forecast facing the state won’t change his level of support for counties and towns, saying healthy local governments contribute to the strength of Wyoming.
“My view has been, and remains, that the counties and the towns are where the action is,” he said. “They make Wyoming strong, and I’m going to ask for a large amount of funding again for local governments.”
Mead made it clear, however, that the state is headed for turbulent waters.
The Consensus Revenue Estimating Group (CREG) will issue its next report in October.
“Without knowing for sure what they are going to say, we have a pretty good sense that it’s bad,” said Mead, citing low natural gas prices as one of the reasons. It’s been below $3.
“To give you a sense of how sensitive our revenues are to natural gas, last session, in response to a 25 cent reduction (in the price of natural gas), we had to take $115 million out of our budget. That was when gas was between $4.50 and $5. Now it’s below $3.”
Mead said low oil prices add to the concern. People who work in the industry are telling him that they don’t anticipate the per-barrel price to reach $60 to $65 anytime soon. Innovations in the way oil is captured have contributed, as have decisions made overseas. “Saudi Arabia is irritated at Russia and at us, and they have the ability to burn through a lot of money keeping prices low,” he said. “They want to crush the competition. They think they can hurt the industry in the United States and Canada.”
Mead also spoke of the challenges faced by the coal industry. He said he met with the governors of Washington and Oregon, but that philosophical differences remain that are making it difficult for Wyoming to get its coal out of the ports in those two states. Mead said he can explain how great Wyoming coal is and that it’s the fastest growing energy resource on the planet, but that they “don’t want coal burned anywhere.”
The governor added that coal companies, which are already facing huge losses, may also soon have to pay more in royalties. The U.S. Department of Interior is considering an increase, according to the governor.
With the energy industry going through a rough patch, Mead said he is more convinced than ever that the state needs to dip into its “rainy day fund,” which he claims has doubled in size in the past four years. “We are in as good a position as you can be in preparing for this,” he said. “This isn’t Wyoming’s first rodeo, when it comes to low energy resource prices.”
Mead said he knows that local governments struggle with the funding fluctuations and that the result is that they struggled to hire and retain good employees and plan the projects that they need for their communities.
“This is a good opportunity for us to use the rainy day fund for a smoothing effect, (as an alternative) to cutting everything by 20 percent,” he said. If the state were to do so, it would be like “putting out the ‘Closed for Business’ sign in the state. That would be a terrible message to send.”
Summing up the economic part of his meeting, Mead said he’s optimistic the state will come out of its energy slump.
The governor’s visit to Greybull was the first of three stops in the Big Horn Basin on Monday. He also visited with officials in Worland and Thermopolis during the day. Among the members of his traveling entourage were five Girls State delegates, all of whom are about to start their senior year of high school.
In attendance at the meeting were Jerry Ewen and Felix Carrizales of the Big Horn County Commission and Mayor Myles Foley, Town Administrator Paul Thur and Councilman Clay Collingwood, representing Greybull.
The governor received an update on the airport water tank project, a collaboration of the county and the Town of Greybull. The 650,000-gallon storage tank now serves one primary purpose, which is fire suppression for the airport. But the town is working with the county to tie it into its existing water system. It would be a win-win for both, Ewen said, explaining that it could accelerate further economic development at the airport. Ewen also spoke about the importance of the update of the BLM’s Resource Management Plan, which has the potential to have a great impact on the residents of the Big Horn Basin.
Greybull officials used their time with the governor to bring him up to speed on the levee recertification process — it’s going well, said Foley — and to make him aware of a challenge that the town might face in its effort to acquire and develop the former Tin Can Alley property from the state.
Citing how it’s landlocked by the railroad tracks on the west and the river on the east, Collingwood said the town “has no other place to expand,” other than the Tin Can Alley property. Consisting of about 550 acres in total, it lies between the Big Horn River and the town’s water tank and dog pound.
The town’s primary interest lies in about 220 acres of that site, but has been told repeatedly, according to Collingwood, that the state doesn’t want to break the property up and that it’s “all or nothing.”
Collingwood’s concern is that the town could find itself in a disadvantage in a competitive bidding process. The town has yet to receive an appraisal of what the land is worth, but Collingwood said the law puts limits on how much the town can bid. The expectation is that the land won’t have a high value. If a developer were to enter the bidding, Collingwood said it would be “great.” But his fear is one person coming in, snatching it up, and sitting on it, with no desire whatsoever to develop it.
Collingwood said the site holds great potential and that if the town can steer its development, it can leave spaces open for housing and parks and develop recreational assets. On top of that, it has the potential to be developed into over 100 housing units, in the next 50 years.
Mead was sympathetic, likening the situation to what officials in Riverton are now dealing with. Mead pledged to visit with Bridget Hill, director of the Office of State Lands and Investments, to see what can be done. A land swap might be the best approach, he said.