Wyoming awash in cash

CHEYENNE, Wyo. -- At the Hitching Post Inn, the cocktails were flowing and the roast beef was rare, courtesy of a local fertilizer company. State lawmakers and dignitaries bent elbows as lobbyists worked the reception. Talk drifted, as if often does these days in Wyoming's capital city, toward the spending of some serious money.

A state senator from Casper, or so the evening's rumor had it, was about to propose a $100 million infusion into Wyoming's higher education system. It would be huge, said the University of Wyoming's president, Philip L. Dubois, a glass of red wine in hand -- 30 or more newly endowed chairs in a faculty of about 600.

"It would be the largest single investment in higher education in the state's history for any purpose, at any time, ever," Dubois said later in an interview.

While many other states are still struggling to find their financial footing after years of budget turmoil, Wyoming's government is awash in cash. Part-time citizen-lawmakers who pride themselves on being so parsimonious that they do not have staffs or even offices are pondering how to use an enormous budget surplus. It is the largest surplus in the nation as a percentage of the budget, according to figures from the National Conference of State Legislatures.

The tax transfusion is driven by the energy industry, as most things in Wyoming tend to be. Extraction of natural gas, especially through the process called coalbed methane mining, has boomed, and gas prices have surged at the same time. Wave has built upon wave, resulting in what budget officials now expect will be about $1.2 billion more in tax revenues over the next two years than the state had anticipated.

To put that number in perspective, Wyoming, the nation's least populated state with only 500,000 people, spends about $5 billion a year on everything, and much of that is highway repair and construction, linking up the dots of its far-flung communities. Or think of it this way: A surplus of similar magnitude in California, which is struggling with the nation's largest budget mess, would just about erase all of that state's fiscal troubles this year with the flourish of an auditor's pen.

The college idea, as it turned out, was true. State Sen. Charles K. Scott, a Harvard-educated cattle rancher and a Republican, said in an interview the next morning at the capitol that his amendment was aimed at exploiting the tough times other states are facing. While those states cut higher education spending, he said, it is time for smart people with money in their pockets to steal away the best professors.

"Their universities are open to being raided," Scott said. "I believe we ought to go ahead and do that."

But the talk here is not just about doling out largess or seeking advantage. The deeper philosophical question, underpinning the endless argument about what to do with all that money, centers on the question of time.

No trend in Wyoming economics lasts forever; that is the etched historical wisdom of the last 100 years or so. Wyoming is a seller of raw commodities like natural gas into the global market, and state lawmakers have learned to live with the certainty that certainty itself is an illusion. Like the bucking bronco that adorns state license plates, things that go up always come back down. Old-timers still talk about the years of the Arab oil embargo in the mid-1970s when coal was king. Those fat years are just a memory now.

"There's a prayer around here," said State Rep. Randall B. Luthi, the Republican majority floor leader in the House, who raises cattle and practices law in the town of Freedom. "Dear God, give us another boom and we promise not to waste it this time."

Some politicians, however, led by Gov. Dave Freudenthal, say that this time may be different.

Freudenthal, a Democrat, has argued that a structural change in the energy business, notably the recent completion of some big pipeline projects in Wyoming, make the state's gas supply more competitive. That creates at least the possibility, he believes, of a long-term wave that could keep the tax money flowing for years.

If that happens, the governor said in an interview, Wyoming will have an obligation to start thinking more broadly about the consequences and costs of the boom -- and the energy extraction that produces it -- in order to protect wildlife and environmental quality for future generations.

"The same national energy economy that fills our coffers could inadvertently turn our state into a water and wildlife wasteland," he said in a speech to the Legislature on Feb. 9, the opening day of the three-week 2004 session.

The governor's argument has mostly gone nowhere. He supported one bill, for example, that would have given private landowners a bit more leverage in dealing with gas drillers. Another Democratic idea would have begun a process for rethinking how environmental regulators coordinate their work. They were both modest bills, environmentalists say, but both died on the first day of the session, hours after Freudenthal's speech.

Republican leaders in the Legislature say the evidence is not convincing that this economic cycle will be different. High gas prices cannot last, they say, especially in a presidential election year, when pressures are likely to be intense from Washington to bolster the national economy, which is dominated by energy buyers, not sellers.

Scott's $100 million college amendment ultimately died in the Senate on a 16-14 vote on Feb. 19. A retooled $50 million version died on Feb. 22 on a tied vote, 15 to 15. With the end of the session looming on March 9, the money he had proposed spending is now likely to go into the state's savings accounts, he and other lawmakers said. But Scott said that he thought the idea was on the table, and that the close vote suggested that it had legs, given enough time.

"It's put the issue on the agenda, if this surplus continues next year," he said.

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