Thread by @IAmNickReynolds

Live-tweeting highlights.

Some negative news this morning, as the October 2019 CREG report decreases forecast revenues directed to the General Fund (GF) and Budget Reserve Account (BRA) by $185.4 million over the next three fiscal years. eadiv.state.wy.us/creg/GreenCREG…

https://twitter.com/WYLegislature/status/1189181341105119233

However, there is good news: In 2019, we've actually exceeded the projected revenues for the GF during the 2019 session by more than $176.86 million.

Revenue forecast has been reduced by $185 million over the next three years, says CREG co-chairman Don Richards.

The most important numbers of the day, Richards says, is the LSRA revised transfers in and out, which is $20.7 million higher than it was at the end of session. That's cash in-pocket we didn't have. School Foundation Program is also $80 million higher than march.

However, we sold an underperforming investment at a $118 million loss this year as well, impacting a number of different accounts.

Different types of money in different places, but still.

Probably the ultimate quote for this coming budget: "Going forward, there will be less money. This will make it more difficult for the executive and the legislative branch to budget in the next biennium," Richards said.

Added there will be a continuing shortfall in K-12 ed.

Looking at $400 to $500 million in the coming years, however, it's not going to be as immediate as previously thought, Richards said.

This is irregardless of the outcome of an ECA discussion later in the day: ultimately, it's an expenditure issue.

One positive point is oil, which has seen double digit growth over the last two years. Albert Sommers, however, seems a bit skeptical of the "rosy" outlook for crude given global futures market, which is lower.

Richards said this is true. But we've underestimated prices.

"There is inherent risk, and there is volatility," Richards acknowledges.

Adds that there is also risk in the fact our bedrock -- coal, which was often stable -- is going away, and being replaced by a much more volatile revenue source.

For investments, we're looking at 2 percent growth plus inflation for the next three to five years: a much less rosy revenue environment than we've experienced in the past.

This is... not great, when investments have become more important. But not too consequential on GF.

Positives for revenue: Oil production, sales and use, real property.
Negatives: Capital gains (arguably) and... coal.

"Wyoming’s surface coal production in the first six months of CY 2019 declined by 10.1 million
tons (7.1 percent) eadiv.state.wy.us/creg/GreenCREG…

Future projections only consider current information, so these numbers ignore:

1) Changes in administration. (The current one hasn't helped.)
2) Coal innovations. (We're trying.)
3) Future plant and mine closures. (Who knows?)

Natural gas is also projected to trend downward -- contrasting with an erroneous projection last year after a large producer in Sublette County shut down. This could continue for roughly two years, but may improve after.

Investment income down by $145 million over the next three years.

"From 30,000 feet, Wyoming cannot rely on traditional means of income for our revenue streams," Chairman Eli Bebout said. "This is more of a shift than we've ever had."

On capital construction, we were essentially balanced at the end of session with a $60 million. But with downgrades in revenue, we now have to make some "challenging decisions," including saying no to exception requests.

For reference, UW had $93 million of those.

A longer-term profile on the structural deficit we're facing down the road will be detailed later this week. We could avoid this while we understand our cash streams, which are now more volatile than they've ever been.

Basic numbers: $150 million in GF, $250 in education.

The briefing on CREG is a wrap, but will have a full readout for you later today.