Southern Wyoming and its construction business are finally feeling the full effects of the depressed national economy.
While the rest of the United States fell into recession in recent years, Wyoming remained largely insulated from the cycle, thanks to boom years of energy production. Royalty payments from natural gas extraction padded the state budget with massive surpluses that kept local economies afloat, allowing capital construction projects to flourish at the state and local levels.
But the reserve is running dry, as the natural gas industries and coal-mining operations slow down.
“The overall outlook is not good. We’re seeing a continuation of last year, with a general slowdown in all areas of construction throughout the state,” says Jonathan Downing, executive vice president of the Wyoming Contractors Association.
For the second year in a row, construction jobs and business are down statewide. According to the April edition of "Wyoming Insight," published by the Wyoming Economic Analysis Division, construction sales tax revenues were down 30% in March 2010, compared to the year before. Employment is down 14.5%, or 3,200 jobs, for the same period.
“It’s difficult to get a job right now. A lot of bigger projects are winding down, and we are seeing a lot of layoffs,” says Josh Carnahan, president of the Associated Builders and Contractors of Wyoming.
Major projects wrapping up this year include the $88.6-million State Joint Labs Project, with one laboratory located in Cheyenne and the other in Laramie on the University of Wyoming campus.
Like most areas of the country, the region’s private sector is suffering from declines in sales tax revenue and the fall of the housing market.
“Commercial and retail projects are scarce. We’re not seeing businesses taking the risk that we would have in better times,” Carnahan says. “It’s extraordinarily competitive to win a bid job right now.”
Downing remains optimistic that “bargain basement” prices on construction services and materials will drum up some new business in the private sector and offset some of the losses in state and federally funded projects.
At the state level, the legislature is bracing for revenue shortfalls and relatively modest energy production over the next couple years, as evidenced by budget cuts imposed last year and the leaner biennium budget approved in March.
State General Fund appropriations for the 2011-2012 fiscal biennium that begins in July are $2.9 billion, down almost $1 billion from the last budget cycle.
“There are limited state funds to fuel construction right now, and since Wyoming was the first state in the country to spend all of its federal stimulus money, we can’t count on federal money to help us now and make up the difference. We just have to ride it out,” Downing says.
The new budget allows $302 million for capital construction projects—$135 million of which is appropriated for community college projects throughout the state, according to Richard Cathcart of the state’s general services division.
But the budget is not the final word on capital construction. Requests for additional funding can be presented during the each budget session.
“There is still the potential for more projects to be funded, but at this point, they are just thoughts on the page without any funding. It’s a matter of legislative action,” Cathcart says.