Wyoming has received a positive outlook from S&P Global Ratings due to its healthy reserves and plans to increase permanent funds to mitigate revenue fluctuations. The AA issuer credit rating of the state has been affirmed, with a one-in-three chance of being upgraded over the next two years. This positive outlook is a result of the state’s robust budgetary performance over the current biennium, according to S&P analyst Savannah Gilmore.
S&P also expects Wyoming to maintain reserves at high levels, preserve stability in its permanent funds, and take corrective action if budgetary pressure unfolds over the near term. These proactive measures could help mitigate fluctuations from the state’s cyclical revenue base. Wyoming boasts four permanent funds, including the Wyoming Mineral Trust Fund, the Common School Permanent Land Fund, the Excellence in Higher Education Endowment Fund, and the Hathaway Student Scholarship Endowment Fund.
The state’s economy is heavily concentrated in the coal, oil, and gas industry, which poses potential economic challenges as utilities shift to natural gas from coal. S&P analysts have highlighted these concerns in previous reports. Despite these challenges, Governor Mark Gordon signed a $10.6 billion 2024-26 biennium budget after a contentious budget season. The budget aims to address the state’s challenges and position Wyoming for a prosperous future.
Governor Gordon, a Republican, expressed frustration with lawmakers for their squabbling during the session, as reported by Wyofile. With more than 90% of the state legislature being Republicans, passing the budget proved to be a challenge. Even with a 29-2 GOP majority in the state Senate, the budget only passed by a narrow 17-14 margin. If Wyoming faces significant budgetary pressure in the next biennium and experiences a material drawdown in reserves, S&P could revise the outlook back to stable.
S&P could potentially lower the state’s rating if it falls into a pattern of deficit spending. On the other hand, the rating could be raised if there is anticipation of Wyoming maintaining long-term structural balance and keeping its reserve levels very high to mitigate historical swings in severance-related revenues. As the least populous state in the US, with a population of less than 577,000 according to the 2020 Census, Wyoming faces unique challenges and opportunities in managing its finances and sustaining economic growth.
Wyoming’s positive outlook from S&P Global Ratings is a testament to the state’s commitment to fiscal responsibility and long-term stability. By carefully managing its reserves, permanent funds, and budgetary performance, Wyoming aims to navigate economic challenges and position itself for a prosperous future.Governor Gordon and state lawmakers must continue to work together to address budgetary pressures and maintain Wyoming’s financial health for the benefit of its residents and future generations.