BudgetU.S. to cut mineral payment to states by $110 million between now and August

Published 29 March 2013

The U.S. Department of Interior  will cut its federal mineral payments to thirty-five states by $110 million due to the federal budget cuts. Different states will lose different amounts of money: Wyoming tops the list with $53 million in lost federal mineral payments over the next five months, while North Carolina is bringing up the rear, with the federal government cutting its mineral payments to the state by $7 (seven dollars) between now and August.

The U.S. Department of Interior (DOI) will cut its federal mineral payments to thirty-five states due to the federal budget cuts.

The  Washington Post reports that  the cuts will save around $110 million during this fiscal year. Wyoming governor Matt Mead told the Post that that his state will lose $53 million over the next five months. Last year Wyoming received $1 billion in federal mineral payments, and the state is the largest coal-producer in the nation.

Mean said earlier this week that he received no warning in advance from the federal agency that they cuts will take place.

“As far as communications go, this method of passing along significant information that greatly impacts Wyoming gets a grade of F-minus or worse. It is not acceptable,” Mead told thePost. He said he has asked the state attorney general’s office for advice on the Wyoming’s options.

Last year the federal government paid out $2.1 billion in mineral payments, which represent its share of revenue from energy and mineral production that take place on federal land and off-shore within that state.

The money that Wyoming receives helps to fund state government operations and helps the state avoid having to impose  a personal or corporate income tax. Mead is trying to set up a meeting with other states  affected by the cuts in order to develop ways to reverse Interior’s decision.

Even if that plan fails, Wyoming is still sitting pretty because the state is on track to finish the fiscal year with about $1.6 billion in its rainy day fund and has billions more in permanent savings.

New Mexico, a leading natural gas and oil producer, will lose $26 million. The money represents less than 1 percent of the total revenue the state expects to receive in its main budget account in the fiscal year.

Despite the state being able to handle the cut in revenue, State Senator John Smith (D-New Mexico), who is on the State Senate committee which handles the budget, is concerned that the money being cut is just the “tip of the iceberg” of potentially larger federal cutbacks to states.

“As far as being able to ride the storm out right now in the short-term, obviously we can do that with the reserves that we are forecasting,” Smith told the Post.

New Mexico is also comfortable with a safety net of around $570 million at the end of the fiscal year and cash reserves equal to 10 percent of the states spending.

DOI will take $8.4 million from Colorado, $5.5 million from California. The price range for state loses drops all the way to North Carolina, which will be losing  $7.

Pat Etchart, the spokesman for the Interior Department’s Office of Natural Resources Revenue in Denver, said that the department had no choice because of the budget cuts.

“Cumulatively, approximately $110 million —  or 5 percent of FY 2013 estimated disbursements —  will be withheld from several states and counties where energy production occurs on federal lands during the remainder of the current fiscal year,” Etchart told the Post. Etchart added that counties where geothermal energy production will also see losses.