Wyoming outlook revised to positive by S&P

Healthy reserves and plans to increase permanent funds to mitigate revenue fluctuations earned Wyoming a positive outlook from S&P Global Ratings.

S&P affirmed the state’s AA issuer credit rating, which now has a one-in-three chance of being upgraded over the next two years, as a result of the the positive outlook being elevated from stable, according to S&P analyst Savannah Gilmore.

“The positive outlook reflects the state’s robust budgetary performance over the current biennium,” Gilmore said.

S&P also expects the state will continue to maintain reserves at high levels, preserve stability in its permanent funds, and take corrective action if budgetary pressure unfolds over the near term, Gilmore said. Those actions could mitigate fluctuations from the state’s cyclical revenue base, she said.

The state has four permanent funds: 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. The state’s mineral trust fund, the largest of the funds, had a market value of $11.3 billion as of Feb. 29, according to a treasurer’s report.

The state’s economy has a high concentration in the coal, oil and gas industry, increasing the potential for economic challenges as utilities switch to natural gas from coal, S&P analysts have opined in previous reports.

S&P’s outlook revision comes after Gov. Mark Gordon signed a $10.6 billion 2024-26 biennium budget following a particularly contentious budget season, according to Wyoming File, a publication that tracks state government.

“This budget addresses our challenges and positions Wyoming for a prosperous future,” Gordon said in a statement. He took lawmakers to task for all the squabbling during the session in a letter to Senate President Ogden Driskill.

Gordon is a Republican, as are more than 90% of the members of the state legislature.

Despite a 29-2 GOP majority in the state Senate, it only passed the budget by a 17-14 margin, according to Wyofile.

If the state experiences significant budgetary pressure over the next biennium, leading to a material drawdown in reserves, S&P could revise the outlook back to stable. It could lower the rating, if it falls into a pattern of deficit spending.

“We could raise the rating if we anticipate it will maintain long-term structural balance, and that its reserve levels will remain very high to help mitigate Wyoming’s historical swings in severance-related revenues,” Gilmore said.

Wyoming is the least populous state; The 2020 Census counted less than 577,000 people there, more than 10% below 49th-place Vermont.