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Great year in '13 for state's investments; income soars by more than $500 million
Jan 15, 2014 - By Ben Neary, The Associated Press
The State of Wyoming capitalized on last year's record-breaking year on Wall Street to bank hundreds of millions in profits on state investments.
The earnings will help lawmakers as they meet next month to start crafting a new state budget.
Wyoming's investments stood at $17.6 billion at the end of November, the latest figure available. Much of that is in permanent funds that may be invested in stocks.
Wyoming doesn't typically spend capital gains until they're realized at the end of a fiscal year.
State Treasurer Mark Gordon and Chief Investment Officer Michael Walden-Newman said Tuesday that the state realized $578 million in capital gains in the fiscal year that ran through last June. That money will be available to spend in the two-year budget cycle that begins this July.
Walden-Newman said Wyoming saw its largest investment income ever in the last fiscal year, with the total after fees of $936.5 million.
Gordon said Tuesday the state reorganized its fixed-income investment portfolio last year in anticipation of possibly rising interest rates. He said that led to some extraordinary gains.
"The reason for that being done is because there was a lot of concern about what would happen with interest rates," Gordon said. "The state's well positioned on the fixed income portfolio, but fixed income is a tough place to be right now."
However, Gordon said, "You bring up the equity side, and the stock market has done exceedingly well. The permanent funds are the only ones that can be invested in equities."
The Standard & Poor's 500 recorded its best year in 2013 since 1997, ending up 29.6 percent. The Dow Jones industrial average also turned in a stellar performance: It closed up 26.5 percent, its best gain since 1995. The two indexes combined closed at record highs nearly 100 times.
Gov. Matt Mead told lawmakers last month that the extra revenue means the state won't have to repeat the budget cuts it's seen recently.
Mead, in his budget message to lawmakers in early December said the state is on firmer ground that it was a year ago.
"We are fortunate that state revenues are higher than forecast," Mead said. "Recognizing that much of the extra revenue came from capital gains and otherwise revenue shows modest growth, we should not get ahead of our ourselves and spend like there is no tomorrow."