| BUCK McVEIGH, CO-CHAIR
Dept. of Admin. & Info. Economic Analysis Division Rm. 327E Emerson Building 307-777-7504 |
 |
STEVE SOMMERS, CO-CHAIR
Legislative Service Office Rm. 213 Capitol Building 307-777-7881 |
| Consensus Revenue
Estimating Group Cheyenne, Wyoming 82002 |
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| DON LIKWARTZ
Oil & Gas Commission |
WILLIAM MORGAN
University of Wyoming |
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| LANCE COOK
Wyoming Geological Survey |
BARRY NIMMO
Department of Education |
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| JOHNNIE BURTON
Department of Revenue |
GLENN SHAFFER
State Treasurer's Office |
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| GARY STEPHENSON
State Auditor's Office |
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From:
Buck McVeigh, Cochairman
Steve Sommers, Cochairman
Date: January 18, 2000
The Consensus Revenue Estimating Group (CREG) met on January 10, 2000 to review the revenue forecasts made in October 1999. This narrative and the attached tables provide a summary of the changes in assumptions and the resulting revised forecasts.
The only changes made in the General Fund revenue projections were to sales taxes, severance taxes, and inheritance taxes. Projections for the remaining revenue sources were left unchanged from the October 1999 report.
The sales tax forecast was revised upward from the 2.5% annual growth rate determined in October 1999 to 3.5% throughout the forecast horizon. This resulted in increases to General Fund revenue projections from sales taxes of approximately $2.0 million in FY00, $5.0 million in FY01, and $7.0 million in FY02.
Revisions to mineral price and production estimates resulted in a slight increase in projected severance tax revenues to the General Fund. Revenue estimates were revised upward by approximately $1.6 million for FY00, and approximately $400,000 for each biennium beyond FY99-00.
Revenues from inheritance taxes were revised upward for FY00 while projections for the subsequent years were left unchanged. The FY00 projection of $7.5 million was raised to $45.1 million in order to accommodate two extraordinary receipts; one of $7.5 million and another of $28.1 million.
The net effect of these revisions to the General Fund revenue categories resulted in an overall increase of $53.7 million in projections for the FY00, 01 and 02 periods.
The crude oil price forecast for calendar year 1999 was increased from $14.50 to $15.00 per bbl. because oil prices
were much higher in the last half of 1999, and are expected to remain strong through March of 2000. However,
once OPEC meets in March, prices could decline. The long-term price forecast was left unchanged at $15.00/bbl.
NOTE: The incentive severance tax rate reduction contained in the Oil Producers Recovery Act, passed during the
1999 session, expires once the average price received by Wyoming producers exceeds $20.00/bbl. for three
consecutive months as determined by the Department of Revenue (DOR). Preliminary information from the DOR
indicates that a $20.00/bbl. price level was achieved for September and October production. If that price level is also
achieved for November production, the incentive tax reductions would end, effective with December production. The
DOR will not know until the end of January 2000, when November production tax returns are due, whether an
average price of $20.00/bbl. was attained for three consecutive months. This report does not assume the incentive
tax rates have expired. In the event the incentive tax rates do expire, the CREG will revise this report accordingly.
Estimates of crude oil production were increased in each year of the forecast by slightly more than 1.0 million barrels per year. These revisions were due to higher than expected oil prices, as mentioned above.
The lone revision to the natural gas forecast for calendar year 1999 was to increase average price from $1.95/mcf to $2.05/mcf. The price is expected to remain at the current forecast level of $1.85/mcf in 2000 and beyond. As was the case with oil, the price received over FY00 is expected to be slightly higher than the calendar year averages, and is expected to be $2.00/mcf over the period of July 1999 through June 2000.
Slight downward revisions were made to the October 1999 uranium production estimates, however, no other mineral projections were changed.
The net effect of these revisions was an increase of $5.5 million in total severance tax revenue projections for FY00, and an increase of approximately $1.5 million in each biennium beyond FY99-00.
The price and production revisions made to severance taxes were also applied to federal mineral royalty assumptions. These revisions resulted in a $5.4 million increase in projected FY00 federal mineral royalties from regular mineral production, and an increase of approximately $1.1 million in each biennium beyond FY99-00.
No changes were made to coal lease bonus revenue from the October 1999 projections. While there are coal lease sales anticipated in calendar years 2000, 2001, and 2002, until the sales are made and the state’s share of these revenues are known, they will not be included in the report. Please be aware that these sales could result in significant revenues flowing to the state by 2001.
Please note that due to revisions in mineral production and price estimates, the state total assessed valuation projections will be slightly higher than those projected in October 1999.
No other revisions were made to the forecasts contained in the October 1999 report. As always, the CREG will continue to monitor the revenue issues and apprise as needed.
Income to the Common School Land Income account is derived from investment of the Common School Permanent Land Fund, and from grazing fees and other leases of public lands dedicated to schools. This income is considered a "local resource" by the school districts in computing the K-12 school foundation program entitlements.
The State Treasurer's Office has estimated that interest will be earned on the Common School Permanent Land Fund at an average of approximately 7.00% per year over the forecast period. Additionally, income from grazing fees and other leases will generate approximately $9.0 million per year. These sources result in the following estimates of distributions from the Common School Land Income Fund to the school districts (figures are in millions of dollars):
| Historical: | FY85 | $44.5 | |
| FY86 | $45.5 | ||
| FY87 | $42.8 | ||
| FY88 | $54.0 | ||
| FY89 | $53.8 | ||
| FY90 | $72.0 | ||
| FY91 | $68.0 | ||
| FY92 | $66.6 | ||
| FY93 | $61.8 | ||
| FY94* | $85.1 | ||
| FY95 | $66.1 | ||
| FY96 | $69.9 | ||
| FY97 | $61.9 | ||
| FY98 | $68.1 | ||
| Projected: | FY99** | $88.4 | |
| FY00 | $70.0 | ||
| FY01 | $72.0 | ||
| FY02 | $73.5 | ||
| FY03 | $76.0 | ||
| FY04 | $79.0 |
* The FY94 total contains an additional $14.9 million in cumulative capital gains income which, for several years, was reinvested as part of the permanent fund corpus instead of being credited to the income account.
** The FY99 total contains 15 months of income due to a change in state statute which distributes income monthly rather than semi-annually.