CASPER, Wyoming — Many county commissions throughout the state have frozen hiring, banned travel, scaled back construction projects and are considering dipping into savings in the face of lower revenues.
With crude prices almost half of what they were a year ago, almost all of Wyoming's 23 counties have been hit hard or will have to make tough choices next year, said Pete Obermueller, executive director of the Wyoming County Commissioners Association.
The Wyoming County Commissioners Association and the Wyoming Association of Municipalities sent a letter to Gov. Matt Mead on Monday that acknowledged the state is in the same revenue shortfall predicament for the very same reasons local governments are constrained. But representatives from the groups asked the governor to keep some funding intact in budget recommendations that he's expected to unveil next week.
In many areas of the state, local government is a top employer. Local governments also spur economic growth in many counties through construction projects. Thus far, no counties have announced layoffs.
The largest shortfalls come from decreasing property taxes, which make the greatest portion of a county's revenue, the Casper Star-Tribune reported (http://bit.ly/1PUNZHW).
Taxes are assessed on homes, commercial buildings, land, agricultural property and mineral production. The mineral taxes flow to counties in the form of ad valorem taxes, assessed on the value of natural resources such as oil. Ad valorem taxes are projected to be down.
In 2014, the entire value of all property and mineral production in Wyoming was $26.1 billion, according to a state revenue forecast. In 2015, the valuation is expected to drop to $20.9 billion.
"Most counties are trying to deal with this either by attrition or by tapping into whatever reserves they might have in order to balance their budget," Obermueller said.
Sheridan County has instituted several budget cuts. Washakie County is also facing fewer revenues, he said.
"Niobrara County — the only county that doesn't offer employees health care because they can't afford it — they're having to look at what benefits they offer, such as they are, and consider what to do about those," Obermueller said.
Other counties have instituted travel and hiring freezes, he said.
In Johnson County, commissioners have assembled a committee of county employees and elected officials to develop a wellness program to keep health care costs down, said Bill Novotny, a county commissioner.
"We're partially self-insured here," Novotny said. "We've got to control our costs. And the only way we can do that is by instituting a wellness program. And we'll be looking at every avenue we can to try to help control those costs."
Johnson County's valuation last year was $850 million. It is projected to be $450 million or less by the end of this year, Novotny said.
Sales taxes in Johnson County are also down. In November, the county received $79,000 in taxes on October sales.
That's down from November 2014, when Johnson County received $143,000, Novotny said.
Property, sales and ad valorem taxes go into the county's general fund. The general fund pays for employee salaries and benefits, public safety and the county courthouse, public health, the library, museum and fairgrounds, Novotny said.
In Natrona County, the value of property and mineral production increased last year from $1.4 billion to $1.5 billion, said County Commission Chairman Forrest Chadwick.
That's because several large construction projects were completed - such as the Casper Crude to Rail loading facility - and those projects were included in this year's assessed valuation, he said.
But next year might not be as rosy, and two months ago, commissioners announced cuts.
"We've asked all our department heads to hold the line on spending," Chadwick said. "We've also instituted a hiring freeze. We've cut our one-cent commitment by 10 percent across the board. However, if it's a project that we have to keep funded, then we will talk about it with the requesting department and then figure out how we're going to meet the needs — not wants — but needs of that funding request."
The one-cent sales tax is approved by voters. The county surveys voters to determine how they want the extra sales tax spent. Residents wanted it used on a number of projects, including to the road and bridge department to pave and gravel roads. About $5.3 million was supposed to be spent on roads from the tax, but that's been cut by $530,000, Chadwick said.
Chadwick said sales taxes aren't down much in Natrona County but he is concerned about decreased federal mineral royalty payments made to the state, which wind up in county accounts.
"We'll be OK this year, for sure," Chadwick said about the fiscal year that ends June 30. "It's next year where we've got to get the pencil sharpened."
Converse County benefited from the most recent oil boom. The value of all property and mineral production this year in Converse County is $1.8 billion, said County Assessor Dixie Huxtable.
Huxtable doesn't have a good projection for next year because oil prices keep changing, she said. But in May, she projected it would be about $1.3 billion.
Since the amount of taxes collected is based on ad valorem and property values, commissioner Jim Willox said next year's revenue could look like the amount collected in 2014.
Willox said he's not too worried.
'We're expecting to go down some, but our volume of production has been higher than previous years," he said. "We don't expect to go down as far as other counties because of the trend line."
When oil prices were higher, the county used the influx of cash to pave roads and erect buildings.
"We have not increased our operating expenses dramatically," he said. "As we face a contraction, most of our contraction will be in capital projects, not operations."
Last month, when Gov. Matt Mead announced he was cutting $200 million from state government to keep the budget balanced this year, he said he wanted to continue to send money to cities, towns and counties.
"I know some in the Legislature are feeling perhaps now we don't need to fund local government," he said. "I don't believe that because I think that the repercussions of that would cause even greater deficit to the state."
Mead continues to have the same position, spokesman Seth Waggener said Tuesday.
Next week, Mead will release budget recommendations for the Legislature to consider. When lawmakers convene Feb.8 in Cheyenne, they will pass a two-year budget for the state, which will reflect the lower revenues.
In the letter to Mead, the local governments asked for less money.
In the current two-year budget cycle, the Legislature provided local governments $175 million, which is split up among 99 cities and 23 counties. Of that, $70 million was for capital construction projects, said Obermueller of the County Commissioners Association.
"We've asked the governor to forgo that $70 million in capital construction as a way to deal with the state revenue problem and just focus on the $105 million that's divided 122 ways as a backstop for us for operational expenses," he said. "All that will do is help us stop the bleeding from the assessed value and sales tax decline."
Rep. Tim Stubson, a member of the Joint Appropriations Committee — the first group of lawmakers to craft the budget bill — wants money to local governments to be a priority.
"Certainly the state doesn't have a ton of extra money to send the counties' way, but we're going to have to do something to make sure they have the resources they have to keep up basic services," the Casper Republican said. "How they do it, we'll see. We'll see what the governor's budget is next week."
Sen. Chris Rothfuss, the Democratic leader in the state Senate, said local governments need to be a priority.
He believes the Legislature should pay for some construction projects, since leaky roofs and cracked roads only become worse - and more costly to fix - over time.
Democrats in the Legislature are arguing that instead of cutting government programs or jobs, the state should redirect money to the General Fund that automatically goes into untouchable savings accounts.
"What we have to recognize is there's a cost associated with delaying a lot of the infrastructure projects cities, towns and counties have to undertake and a lot of the operations they have to undertake," he said. "We need to make sure that continues, even in a downturn of Wyoming revenues. We can't just be shutting down our counties because it's a bad year."
Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com