Posted: Sunday, July 12, 2009 12:00 am
JOAN BARRON
CHEYENNE - Many states have used the federal economic stimulus money to plug budget holes hoping that the fix will last until the economy turns around. Wyoming isn't one of those states. The state is spending most of the money on highways and sewer and water projects, one-time infrastructure investments. Gov. Dave Freudenthal has been selective so far with the pots of money to apply for.
He believes the nation is in a three-year recession cycle with some bumpy times ahead when the sharp decline in natural gas prices, in particular, start showing up in the state's revenue flow.
Wyoming so far has escaped the worst of the economic downturn. A dip in sales tax revenues in May and June may or may not be the first sign that Wyoming also is vulnerable to national
pressures. Sales tax revenue is the top source of money to the state's general fund. People who have been around here for awhile know that downturns can be long and unpleasant. The governor's role as the leading state scold on the budget would delight some state government observers. The budget shortfall news coming out of state capitols has been shocking but not shocking enough, writes Alan Greenblatt in the latest online issue of Governing Magazine. This year stimulus dollars made up about 40 percent of states' shortfalls. The money is screening the bottom line situations of the states' budgets. Instead of planning ahead, many states have muddled through, hoping the economic skies will brighten by next year making budgets easier to deal with. That's unlikely to happen, the article said, and many states are beginning the new fiscal year looking at fresh shortfalls that will require action within a few months. "The one-time funds that were used to close gaps this year are now
largely depleted. There will still be some stimulus dollars to play with next year, but then those will run out," Greenblatt wrote. "Over the next two years, the 50 states could easily be looking at a collective gap of $200 billion beyond what the stimulus will cover, with no further help in store from the feds," he added. Greenblatt looked at two states - Maine and Utah. Maine officials cut the state budget by $500 million, a move that will affect state employees and about everyone else in the state. But the Maine budget writers avoided some massive disruptions and focused only on the next two years. So did budget writers in other states that used the stimulus money to delay making major longer term decisions like drastic cuts in services and programs. Utah tried longterm reorganization and across-the-board cuts to make up a 12 percent budget deficit. As always with this approach, there were unfortunate victims. For example a 40 percent cut for a program that provides disabled
adults with a payment of $261 per month. The fallout from this cut is likely to be 500 to 600 more people showing up at Utah's largest homeless shelter, the article said. Over the past two years demand at the shelter has increased 52 percent. Utah's Department of Workforce Services tried to find a solution to cope with the smaller budget. The upshot is a revamped program that drops people with serious barriers to work, such as substance abuse and mental health issues. Since there are unlikely to be other financial assistance or organizations to help these people they will end up in homeless shelters. The states, essentially, now believe the worst is ahead, the article concluded. To take a deeper, longer look at government programs, Maine is taking a predictable path. The state is setting up a joint style government streamlining commission to include legislators and executive branch officials. Wyoming may be next.
Contact Joan Barron by e-mail at joan.barron@trib.com or by phone at (307) 632-1244.