Wyoming recently received a positive outlook from S&P Global Ratings, with the agency affirming the state’s AA issuer credit rating. This positive outlook comes as a result of the state’s healthy reserves and plans to increase permanent funds to mitigate revenue fluctuations. S&P analyst Savannah Gilmore highlighted the state’s robust budgetary performance over the current biennium as a key factor in the decision to elevate the outlook from stable to positive. Additionally, S&P expects Wyoming to maintain reserves at high levels, preserve stability in its permanent funds, and take corrective action if budgetary pressure unfolds over the near term. These actions are crucial in mitigating fluctuations from the state’s cyclical revenue base.
Wyoming boasts four permanent funds, namely the Wyoming Mineral Trust Fund, the Common School Permanent Land Fund, the excellence in higher education endowment fund, and the Hathaway student scholarship endowment fund. Among these, the Wyoming Mineral Trust Fund stands out as the largest with a market value of $11.3 billion as of Feb. 29, according to a treasurer’s report. These permanent funds play a significant role in ensuring the state’s financial stability and long-term prosperity.
Despite the positive outlook, Wyoming faces economic challenges due to its high concentration in the coal, oil, and gas industry. S&P analysts have expressed concerns about potential challenges as utilities transition from coal to natural gas. This shift in the energy landscape could impact Wyoming’s economy and revenue streams in the future. It is essential for the state to diversify its economic base and adapt to changing market trends to ensure continued growth and stability.
Governor Mark Gordon recently signed a $10.6 billion 2024-26 biennium budget, marking the end of a contentious budget season. Despite the challenges faced during the budget negotiations, Gordon remains optimistic about Wyoming’s future. However, it is important to note that the budget passed with a narrow margin in the state Senate, indicating potential disagreements and challenges in implementing financial policies moving forward. The state must remain vigilant and proactive in managing its budget to avoid deficits and maintain fiscal responsibility.
Looking ahead, S&P’s positive outlook for Wyoming could change if the state experiences significant budgetary pressure leading to a material drawdown in reserves. In such a scenario, S&P may revise the outlook back to stable or lower the rating if a pattern of deficit spending emerges. On the other hand, maintaining long-term structural balance and high reserve levels could potentially lead to a rating upgrade in the future. Wyoming must prioritize financial prudence and responsible budget management to navigate through economic uncertainties and volatility.
While Wyoming’s positive outlook from S&P Global Ratings is a promising sign of financial strength and stability, the state must remain vigilant in addressing economic challenges, diversifying its revenue sources, and maintaining a disciplined approach to budget management. By leveraging its healthy reserves and permanent funds effectively, Wyoming can navigate through potential obstacles and secure a prosperous future for its residents.