Permanent Wyoming mineral trust fund deposits-2.

06LSO-0407.L1

                                                         

FISCAL NOTE

 

 

FY 2007

FY 2008

FY 2009

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Revenue Increase (Decrease):

 

 

 

BUDGET RESERVE ACCOUNT

(44,100,000)

(42,300,000)

(43,300,000)

GENERAL FUND

(22,000,000)

(21,200,000)

(21,600,000)

PERM. MINERAL TRUST FUND

66,100,000

63,500,000

64,900,000

GENERAL FUND

760,000*

2,810,000*

4,830,000*

 

Source of revenue increase (decrease): Redistribution of severance taxes from the Severance Tax Distribution Account (STDA) to the Permanent Mineral Trust Fund (PMTF); Increase in PMTF investment income distributed to the General Fund.

 

Assumptions:

 

The above estimates are based on January 2006 CREG projections.

 

This bill increases the distribution of severance taxes from the STDA to the PMTF from two-thirds (2/3) to 100% of the amount of severance tax collected on oil, gas and coal that is constitutionally directed to the PMTF for the same period.

 

The above estimates assume the increased distribution of severance taxes to the PMTF occur quarterly throughout the fiscal year, with an increase of PMTF dividend income to the General Fund of 3.07% for FY07, 3.12% for FY08 and 3.14% for FY09.  *These figures do not include any projected income from equities above dividend income.

 

The equity portion of the PMTF produces income from dividends and capital gains.  The Treasurer’s Office expects equities to produce income during the forecast period, as they have in the past.  However, no income is projected from equities above dividend income, because it is virtually impossible to predict what capital gains will be taken during any one year of the forecast period.

 

Based on market projections, we assume a 7% long term total return (10+ years) for the PMTF invested in a fully diversified portfolio of 50% equities and 50% fixed income & cash. The PMTF’s actual return for the 3-year period ending 06/30/05 was 8.2%, with 71% of the portfolio allocated to fixed income & cash and 29% allocated to equities.

 

Prepared by:   Dean Temte, LSO    Phone:   777-7881

(Info. provided by Sharon Garland, Treasurer's Office; 777-7475)