Traverse City Record-Eagle

Business

March 28, 2013

Mineral payments to 35 states cut

CHEYENNE, Wyo. (AP) — The U.S. Department of Interior is cutting federal mineral payments to 35 states by about $110 million this fiscal year as part of the automatic federal spending cuts that started this month.

Wyoming Gov. Matt Mead announced this week that his state faces the biggest cut — at least $53 million over the next five months. Wyoming is the nation’s leading coal-producing state and last year received nearly $1 billion in federal mineral payments.

The federal government paid a total of $2.1 billion last year to the states, representing their share of revenue from energy and mineral production that occurred on federal land within the states, as well as offshore.

The federal money helps Wyoming fund state government operations. Income from energy production allows the state to avoid having a personal or corporate income tax.

Mead said he plans to consult with other states affected by the cuts as well as with members of Wyoming’s congressional delegation to try to restore the funding.

Even if the cuts remain in place, they’re unlikely to have much effect on Wyoming state government operations. The state is on track to finish the current fiscal year with roughly $1.6 billion in its so-called rainy day account and has billions more in permanent savings.

New Mexico will take the next-biggest hit, a loss of $26 million. The reduction for New Mexico, a leading natural gas and oil producer, represents about 0.5 percent of the total revenue the state expects to collect in its main budget account in the current budget year.

Democratic Sen. John Arthur Smith, chairman of the New Mexico State Senate committee that handles the budget, said he was concerned that the $26 million is the “tip of the iceberg” of potentially larger federal cutbacks to states.

“As far as being able to ride the storm out right now in the short-term, obviously we can do that with the reserves that we are forecasting,” Smith said.

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