Permanent mineral trust fund-roads.

07LSO-0233.L1

                                                         

FISCAL NOTE

 

Although the dollar amount the Treasurer is to transfer from the permanent Wyoming mineral trust fund (PWMTF) to the highway fund for projects is capped at $200 million and the dollar amount to transfer from the PWMTF to the special revenue account for projects is capped at $100 million, it is not known how much will be transferred each year as the list of priority projects is not yet developed. 

 

Loans are to be repaid to the PWMTF with interest at a rate of 5%, while the PWMTF yield is expected to be lower. Yields to the PWMTF are expected to be 3.27% for FY08, 3.34% for FY09 and 3.36% for FY10.  Yield is defined as the actual cash or realized return on investment.  However, this 5% interest rate on repayment of the loans is lower than the total return rate for the PWMTF. Total returns for the permanent funds are expected to be just under 7% over the long-term (10 plus years), while total returns for the non-permanent funds are expected to be just under 5%.  Total return is defined as growth in the value of a fund including both yield and unrealized gains.

 

The actual total rate of return for the PWMTF as of September 30, 2006, for one year was 7.69%, 3-year return was 7.59% and 5-year return was 7.81%.

 

Prepared by:   Sharon Garland, Treasurer’s Office    Phone:   777-7475

 

Loans from the PWMTF to the Highway Fund would be repaid to the PWMTF from Federal Mineral Royalty (FMR) distributions over the $200 million cap. Such loan repayments would take place each fiscal year before any other over-the-cap FMR distribution would take place. While this loan repayment amount is currently unknown, it is assumed this repayment amount would be no more than $19,268,457.52 per year (based on the amortization of a $200 million loan with annual payments for 15 years at an interest rate of 5% per annum).

 

Loans from the PWMTF to the special revenue fund account would be repaid to the PWMTF from Federal Mineral Royalty (FMR) distributions and coal lease bonus distributions to the local government capital construction account. Such loan repayments would take place each fiscal year before these distributions would take place. While this loan repayment amount is currently unknown, it is assumed that this repayment amount would be no more than $9,634,228.76 per year (based on the amortization of a $100 million loan with annual payments for 15 years at an interest rate of 5% per annum).

 

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