CASPER, Wyo. — Wyoming reaped the benefits of the stock market’s historic 2013 climb.
The state made $310 million more in fiscal year 2013 than it did the previous year, according to reports from the Wyoming Treasurer’s Office. The state’s revenue from interest income and capital gains totaled $936.5 million in FY13. The next highest year on record was FY 2008, when the state made $723 million.
FY14 began July 1.
The state invests in a number of different areas: Treasurys, real estate and equities. Each year, some obviously perform better than others. But in 2013, the stock market was king.
“The markets amazingly aligned with the Federal Reserve,” state Treasurer Mark Gordon said.
Gordon and the state’s investors eagerly await any announcement made by the U.S. Federal Reserve and its chairman, Ben Bernanke.
Every five years, the state treasurer tweaks the state's portfolio to take advantage of the investment world’s best-performing markets. For FY13, Gordon and his staff hedged all bets on equities because of a push by Bernanke and the central bank to encourage investment in the stock market by keeping interest rates low for government Treasurys.
“The central bank policy has taken us to an area we’ve never been before by working hard to encourage investing,” Gordon said.
Next to Alaska, Wyoming earns more from its investments than any other state, Gordon said. States including North Dakota, Colorado and New Mexico also see high returns thanks to their income bases that come from oil, gas and minerals.
“These states have the good fortune to have a fortune,” said state Senate Revenue Committee member Michael Von Flatern, R-Gillette. “If you get away from the nonmineral states, you don’t see that type of gain.”
Lawmakers are thrilled with the gain. The increase in revenues will bring the state’s general fund $100 million more than originally estimated, said Bill Mai, co-chairman of the Department of Administration and Information’s economic analysis division.
The move by the Federal Reserve to spark investments doesn’t always happen, said Steve Harshman, R-Casper, chairman of the state House Appropriations Committee.
“These investments are what’s saving our budget,” he said.
The cash influx will quell talk of raising taxes, Von Flatern said.
“I wish they were investing my money too,” he said.
With sequestration ripping into the state's coffers and and statewide budget cuts in the works, Mai and Wyoming lawmakers are unsure whether the large return on the state’s investments will offset the losses.
The state will have to wait until September to see whether its other revenue streams — federal and state severance taxes on the energy industry, user taxes and mineral royalties — counter budget slashing enough to avoid cutting into the unexpected $100 million bonus.
Mai expects there will be leftover money. But nothing's guaranteed.
“It’s a science when it’s all said and done,” he said. “When it’s happening, it’s a crapshoot.”