Lawmakers only have a bit less than five weeks to figure out which services the state will fund, and for how much, for the next two years. That includes big money for healthcare, schools, colleges and universities, roads, dams and bridges, and spurring future economic growth.
All those decisions need to be made by the start of the state’s fiscal year, which in Wyoming is July 1.
Heading into the midway point for this year’s budget session, some lawmakers seemed doubtful they’d finish budgeting work by the session’s end.
“If they [the House] can't justify a cut, we shouldn't be cutting it,” Sen. Chris Rothfuss (D-Laramie) told Wyoming Public Radio (WPR). “And if we have to fail the budget and go to a special session, I'm in.”
But on Friday, a committee quickly reached an agreement to bridge the $170 million gap between the House and Senate’s versions of the budget, meeting their constitutional obligation.
Lucy Dadayan, a principal research associate with the Tax Policy Center at the Urban Institute, spoke with WPR’s Nicky Ouellet a few days before those negotiations. They talked about a requirement many states have to pass a balanced budget.
Editor’s Note: This conversation has been lightly edited for clarity and brevity.
Nicky Ouellet: Can you talk a bit about what is Wyoming's requirement when it comes to the state budget?
Lucy Dadayan: States have different balanced budget requirements and Wyoming, like 48 other states, has a balanced budget requirement. The only state that doesn't really have a balanced budget requirement is Vermont.
Now, the rules are different in each state. They tend to vary a little bit, whether it's constitutional rule or statutory rule. But in general, the state needs to have a balanced budget in place and in Wyoming, it's constitutional rule.
NO: Why do states have this balanced budget requirement, whereas the federal government doesn't?
LD: Short answer is not to go bankrupt and to have faith so that the taxpayers, as well as the investors, have faith in the state and they can keep investing in the state.
NO: Are you aware of any state, in recent history, not meeting that balanced budget requirement or just not passing a budget?
LD: It's more of an outlier to pass the budget on time. When the budget is not passed on time, there are lots of issues, unintended consequences, that arise and it's hard to catch up with the lost time.
The most recent and most extended timeline for passing a budget [was] in the case of Pennsylvania for fiscal year 2026. Pennsylvania didn't pass the budget for more than four months and it created significant consequences for the state.
I haven't followed very closely, but there has been delays in funding for essential services like your schools and other areas, as well as there has been cuts and temporary measures of closing certain services.
When the budget is not passed, what they can do is pass a temporary budget, two months budget, or cut the non-essential spending or put a stop gate.
States have been very good to increase their rainy day funds and that's what the states can do when the budget is not passed on time. They can use the rainy day funds to fund the services while the session continues, while the negotiations are continued until the budget is passed.
NO: Wyoming has one of the largest rainy day funds in the nation, I think it's like almost a year that they could cover if they needed to.
LD: Yes, and at the same time, Wyoming is one of the states that has a lot more volatile revenue streams, like with heavy reliance on severance taxes and energy sector.
NO: Severance taxes are just taxes on anything that's extracted through mining or drilling operations.
LD: Yes. And of course, given the current environment, given all the things happening, whether it's potential federal funding cuts or economy that is growing, but there is kind of stagnation.
And what's also unique about Wyoming’s budget is that Wyoming doesn't have income tax. In the absence of the income tax, it's hard for the state to forecast revenues, and revenues are more constrained for the state.
Also, Wyoming, as well as a few other states, are on a budget on a biennium basis. And that's really fiscally challenging for the governor as well as for the Legislature to pass a budget for a two year period rather than a one year period, because things can happen. We can have a recession, we can have different economic or other shocks, and it's rather hard to pass a budget for two years, period.
So all those are the reasons why state lawmakers are being a bit more cautious in their budget proposals. And that's why there is differences in priorities to make sure, at the end of the day, the goal is to have a balanced budget in place.
NO: I'm curious if you've been watching Wyoming's current budget debates and how they've been striking you.
LD: I have watched a little bit. I know that there is some $170 million difference between the House and Senate. I think at the end of the day, they will be able to pass the budget on time. It'll be surprising if they don't pass the budget on time.
Wyoming has, in the modern history, has always passed a budget on time. Of course, there have been some cases where there was a heated discussion, but it was always able to pass the budget on time before the July 1st deadline.
There is still some time left until July 1st.
