States Slumping, but Wyoming Is Riding High

While most states are struggling because of the recession, the Cowboy State has bucked the trend--boosting spending and even handing out generous pay raises, all without raising taxes.

The state’s good fortune stems from a long-awaited upturn a few years ago in the market for Wyoming’s coal, natural gas and oil.

“Wyoming is still riding the top of its crest right now,” said Gov. Jim Geringer, who recently signed legislation increasing state spending by 17%, or $237 million, over the next two years. It includes a 20% pay raise for lawmakers and 11% for the next governor.

Times are relatively flush in the private sector, too. Wyoming, with a population of 490,000, had a job growth rate of 1.9% last year even as unemployment rose nationwide.

Wyoming is one of only four states with revenue and spending on target, according to the National Conference of State Legislatures. The others are Texas, North Dakota and West Virginia.

The remaining states are struggling to balance their budgets, and some are considering tax increases. At least 30 have cut their budgets or are holding the line on spending.

Some are borrowing tobacco-settlement money. Others have delayed tax cuts, frozen hiring, raised college tuition or laid off employees.

Programs targeted for cuts include salmon hatcheries in Oregon, food inspections in Alaska and minimum-security prisons in Kansas.

“Every recession, most of the states have severe fiscal problems,” said Scott Pattison, executive director of the National Assn. of State Budget Officers. “But there’s always a handful, for some unique reasons, which are able to avoid that, and Wyoming is showing it’s part of that handful this time.”

The state’s tax burden is low to begin with--Wyoming along with Nevada and South Dakota are the only states with no corporate, business or personal income tax.

Instead, Wyoming turns to taxes on the mining and drilling of oil, natural gas and coal. Direct and indirect taxes paid by the industries pay for about a third of state government operations.

Wyoming sinks a share of those taxes into a $2-billion trust fund, and interest on the fund pays for about 12% of the budget each year. Without that, each working Wyoming resident would have to pay an extra $1,000 a year in taxes, according to the state treasurer’s office.