CHEYENNE -- The mood in Cheyenne is somewhat subdued as Wyoming lawmakers gather for the legislative budget session that kicks off Monday.

State budget gurus are projecting essentially flat revenues over the next two years. Meanwhile, the basic cost of state government has climbed sharply during the last several years of the ongoing energy boom.

"Once we fund those things that we've funded for the last several budgets at or about the same level, we don't have the dramatic amount of money to spend on legislative initiatives," said House Speaker Roy Cohee, R-Casper.

Cohee said it appears legislators will have between $35 million and $55 million to spend on individual projects this year. While that may sound like a lot, it's actually not much wiggle room in a two-year state budget totaling about $7.7 billion, including federal funds.

"The Legislature, for the first time in several budget sessions, is going to have to exercise discipline and diligence, and prioritize its spending," Cohee said.

The Joint Appropriations Committee held weeks of hearings on Gov. Dave Freudenthal's proposed budget recommendations last month.

Rep. Jane Warren, D-Laramie and a committee member, said lawmakers have already submitted bills seeking far more than the $50 million available.

Warren said national trends such as greater interest in renewable energy and a growing concern about the environmental effects of coal could affect the state's long-term financial picture.

"It doesn't mean we're going to go into a deficit; I don't think we will," Warren said. "But I don't think the rate of growth is going to be the same as it was before."

While other states around the country have faced tough decisions about trimming deficits and raising taxes, debates at the Wyoming State Capitol over the past few years have boiled down to what to do with the energy dollars cascading into state coffers. The basic question has been "save or spend?" And the state has done both.

Mike McVay, director of the state Department of Administration and Information, has tracked the growth in the recurring cost of state government programs.

Discounting one-time expenditures, such as capital construction projects and extraordinary agency requests, McVay said the recurring cost of state government was roughly $2.4 billion for the 2005-06 biennium. He said that rose to $2.6 billion for the two-year budget cycle that ends this summer. And he said it will rise again to an estimated $2.9 billion for the coming two-year budget cycle.

Meanwhile, the state's Consensus Revenue Estimating Group -- a panel of state financial experts -- last month predicted a decrease in the state's income from $4.3 billion in the current two-year fiscal cycle to $3.6 billion for the coming 2009-10 period. That drop may seem exaggerated, however, because the state had just over $1 billion in its budget reserve account two years ago compared to just over $280 million currently.

Buck McVeigh, administrator at the state's Economic Analysis Division, is co-chairman of CREG. McVeigh said lawmakers are getting the message that Wyoming's financial picture is changing.

"I think the legislators are well abreast of the situation, where we don't have the big cash surpluses we had several years ago sitting around," McVeigh said. "Budgets have gotten to be such that maintaining the current level of spending requires a great deal more revenue, so we don't see the kind of surpluses that we did in the early stages of this gas boom."

Rep. Colin Simpson, R-Cody, is House majority floor leader. As such, he serves as a gatekeeper, controlling which bills receive time for debate and which wither and die.

"It does require a more conservative mind-set going into this next biennium budget, I do believe," Simpson said of Wyoming's current financial picture.

Simpson said lawmakers need to take a long-term perspective and consider the state's infrastructure needs. He said they must make sure Wyoming "is prepared for the growth that I think is inevitably coming, and to continue to try to be aware of ongoing expenditures versus one-time expenditures."

Sen. President John Schiffer, R-Kaycee, said Wyoming still has enough money to pay for government services, but "it's not as much as we've had for the past two bienniums.

"We've gotten used to spending a lot of money, because we've had a lot of money," Schiffer said.