State officials discuss impact of lost mineral royalties

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SHERIDAN — Following a month in which payments of federal mineral royalties and coal lease bonuses to Wyoming were suddenly slashed by more than $10 million, state officials are scrambling to determine how best to adapt to the new reality of life in the age of the sequester.

Late last month, the Wyoming Treasurer’s Office received a letter from the Department of the Interior indicating that beginning in March and continuing through July, more than $53 million of mineral royalties and bonuses payable to Wyoming were set to be withheld.

Wyoming will lose about $10.6 million monthly with the possibility of even more being cut in August and September.

State officials argue that under federal law, Wyoming is guaranteed 48 percent of revenues from mineral leasing on federal lands in the state. Annually, payments to Wyoming hover close to $1 billion.

The new cuts stand to affect the state’s budgetary reserve account worst of all, although mining royalties also fund municipalities, school districts, highways, the University of Wyoming and school construction among other facets.

Those accounts, however, would only be directly affected if total mineral royalties fell precipitously from their current levels of about $1 billion to $200 million.

Either way, Wyomingites have expressed concerns that the cuts stand to do serious damage to the state’s budgetary abilities.

Governor’s Office spokesman Renny MacKay said Gov. Matt Mead has sought advice on possible legal recourses available to the state.

“Gov. Mead is continuing to talk to the attorney general, the (congressional) delegation and other states as well to find out what options Wyoming has on the table right now,” MacKay said.

“They’ll continue to explore each option and figure out the viability of those options.”
He declined to say what those options might be.

State leaders are also upset with the timing of the letter, saying the federal government failed to provide an adequate notice that Wyoming stood to lose so much so quickly.

Additionally, many said they were annoyed that the federal government, while willing to cut payments to states, will continue to collect mineral royalties and coal lease bonus checks as usual.

“This one, in our opinion, is an outright revenue grab on their part,” Wyoming Treasurer Mark Gordon said. “They’re paying their debts with our paycheck.”

For their part, state representatives were equally upset.

“It is the equivalent of you and me agreeing to share revenues from a business, and if I find that I am short of funds, the solution is for me to keep your share of the revenues,” Rep. Rosie Berger, R–Big Horn, wrote in an email to The Sheridan Press. “This is dead wrong.”
Still, Berger said Wyoming is in a fair position to weather the cuts thanks to its history of prudent budgeting.

“In recent years, Wyoming has not only had a balanced budget, there has been a surplus in that the Legislature has not spent every dollar of revenue that is generated,” she wrote. “Thus, we can work around the (federal mineral royalties) shortfall as we can work around other shortfalls.”

But Berger warned that $53 million in total cuts could eventually force the state to pick up the slack and lead to a potential strain on certain state services and projects.

By |April 5th, 2013|

About the Author:

Paolo Cisneros joined The Sheridan Press staff in August 2012. He covers business, energy and public safety. A Chicago native, he graduated with a bachelor's degree in journalism from the University of Illinois at Urbana-Champaign in 2011.