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State Budgets To Be Hit By Slide In Oil Prices

DAVID GREENE, HOST:

We're spending a little time this morning in oil country. The recent slide in oil prices has hit some state budgets hard. Texas is the biggest loser, if you look at the money it's lost in taxes and royalties, but the actual impact on states can be hard to measure. In North Dakota, falling prices haven't caused many problems at all, even as lawmakers in Alaska are complaining about a, quote, fiscal apocalypse. Wyoming Public Radio's Stephanie Joyce takes us to her oil-producing state.

STEPHANIE JOYCE, BYLINE: Anyone expecting Wyoming governor Matt Mead to paint a grim picture of the state's future in light of falling oil prices was disappointed recently. Here he is in his State of the State address.

(SOUNDBITE OF STATE OF THE STATE ADDRESS)

GOVERNOR MATT MEAD: I am pleased to report to all of you with full confidence the state of the state is strong and getting stronger.

JOYCE: That's a bold statement, given that oil, which accounts for roughly 20 percent of state revenues, has lost more than 50 percent of its value in recent months. In real dollars, for every $5 drop in the price of a barrel of oil, Wyoming loses $35 million in production taxes and royalty revenues. Still, Governor Mead is optimistic.

(SOUNDBITE OF STATE OF THE STATE ADDRESS)

MEAD: We are in a better position now than we've been in the past.

JOYCE: Why? In short, savings - Wyoming has billions in the bank, including more than $2 billion set aside in a rainy day fund. Mead argues that in light of that cushion, lawmakers need to continue investing in state improvements. That's why Mead has asked the legislature to fund things like passing lanes on state highways and a new high-altitude sports training center at the university.

(SOUNDBITE OF STATE OF THE STATE ADDRESS)

MEAD: Our forebears did not view the role of government as a bank. They were not hoarders, but builders.

JOYCE: Meanwhile, in Alaska, the tone is quite different. That state gets up to 90 percent of its revenue from oil, and much of that goes to fund the day-to-day operations of government. The situation there is so serious that Governor Bill Walker brought back a tradition that had been laid aside in recent years - the State of the Budget address. In it, he told Alaskans to brace themselves.

(SOUNDBITE OF STATE OF BUDGET ADDRESS)

GOVERNOR BILL WALKER: I'm talking about deep cuts, and they will hurt. I began these discussions knowing that the positions we're talking about are people - hard-working Alaskans with families.

JOYCE: Walker has halted spending on the state's major infrastructure projects and says budgets could be cut by up to 25 percent over the next four years. That's a far cry from the situation in North Dakota, which produces almost twice as much oil as Alaska. There, it's basically business as usual. Ryan Rauschenberger is the state's tax commissioner.

RYAN RAUSCHENBERGER: Oil is a non-renewable resource. It's a one-time funding source, and it goes in - mostly into long-term trust funds.

JOYCE: In North Dakota, less than percent of oil revenues actually go to the state's general fund, which is probably why Rauschenberger and most other state officials sounded decidedly unpanicked.

RAUSCHENBERGER: Keep in mind we had originally forecasted 8.3 billion in total oil and gas taxes, but by law, only $300 million goes into the general fund.

JOYCE: Of course, no one knows when the oil price slide will end or reverse, and even in states where calm has prevailed it, may not last. Speaking in the hallway immediately after a presentation about future state revenues, Wyoming representative Tim Stubson says the state needs to save.

REPRESENTATIVE TIM STUBSON: If we fall to the temptation of spending every dime when we have it, then we're going to be in real trouble.

JOYCE: But that extreme caution - or as the governor might call it, hoarding - is going to to be a difficult sell with so much money in the bank and so many state needs. For NPR News, I'm Stephanie Joyce in Laramie.

GREENE: Stephanie's story came to us from the public media collaboration Inside Energy. Transcript provided by NPR, Copyright NPR.