The Wyoming Legislature’s 2026 budget session is still four months away, but lawmakers are already scrutinizing the Wyoming Department of Health’s budget.
At $2.2 billion in the current budget, the department accounts for a larger piece of the pie than any other state agency. And some lawmakers are concerned about what may lie in Wyoming’s financial future.
“Wyoming is headed toward an impending fiscal cliff that is caused by what I believe is unsustainable spending,” Sheridan Republican Rep. Ken Pendergraft said last month at the first meeting of the newly formed Subcommittee on the Wyoming Department of Health Budget.
In August, Pendergraft made a motion at a Joint Appropriations Committee meeting to form the subcommittee, which he now chairs. He sought five meetings. Two of those have already taken place — one in Casper, another online.
“This has been a fact-finding thing,” Pendergraft told WyoFile. “This isn’t a grudge match. This isn’t going out and trying to hack with a meat cleaver or anything. But the necessity may well be there — that we’re going to be forced to do some cutting. And if that is the case, we want to do so as judiciously as possible.”
At the end of this month, state financial forecasters will release revenue projections to coincide with the governor’s budget preparations. Those estimates will then be revised in January to provide the latest data to lawmakers, who hold the state’s purse strings. Both reports will give a clearer picture of the state’s financial footing.
Forecasters have long cautioned lawmakers in their CREG reports of the shakiness of the state’s economic picture. Wyoming’s revenue streams are slowly diversifying, but in the process, the state has grown more reliant on its investment portfolio as well as oil and gas production — all of which come with higher volatility than coal.
While lawmakers wait for the latest forecast, Pendergraft said it’s important to be prepared to make tough choices.
“We don’t want this to catch us kind of by surprise, like it did in 2017, like it did in 2021,” Pendergraft said.
In 2017, a fossil-fuel bust resulted in an 8% across-the-board cut to the state budget. And on the heels of the COVID pandemic, Gov. Mark Gordon signed a budget in 2021 that included over $430 million in cuts and the elimination of more than 300 state positions.
“We wanted to learn from those experiences and not repeat bad mistakes if possible,” Pendergraft said.
The formation of the subcommittee also reflects changing political winds at the statehouse.
In even-numbered years, lawmakers create a two-year budget, and 2026 will mark the first budget session since the Wyoming Freedom Caucus won control of the lower chamber in the 2024 election. With that victory, caucus members and allies, including Pendergraft, comprise all but one member of the House Appropriations Committee. The panel has considerable power since it gets the first crack at the budget alongside its Senate counterparts.
In April, the caucus announced it aimed to take inspiration from the Trump administration’s efforts to cut federal jobs and spending by “DOGE-ing Wyoming’s budget by identifying unconstitutional and wasteful spending.”
Altogether, another budget showdown could be in the works — with the Department of Health’s comparatively large budget at the center of it.
In 2024, the Senate passed the budget by just two votes after most Freedom Caucus members and allies voted against it in the House. In a surprise and unprecedented move earlier this year, the Senate refused to pass a supplemental budget after the two chambers split on several spending policies.
The subcommittee’s meetings have so far contrasted with the caustic budget fights of the last few years. The tone has been cordial and data has driven much of the conversation as Department of Health Director Stefan Johansson has walked the committee through the ins and outs of the agency’s mission and budget at the last two meetings.
In September, Johansson guided the subcommittee — which, alongside Pendergraft, includes Powell Republican Sen. Dan Laursen and Laramie Democrat Rep. Trey Sherwood — through each of the department’s four divisions.
Approximately 95% of the department’s budget covers medical services, including via facilities like the Wyoming State Hospital in Evanston, the Life Resource Center in Lander and the Veterans Home in Buffalo. The other 5% accounts for administrative costs, such as claims processing and state employee salaries.
Wyoming has not expanded Medicaid under the Affordable Care Act, so the federal-state health insurance program is reserved for certain low-income and medically needy individuals and families. As of August, 66,225 Wyoming residents are enrolled in Medicaid — 61% are children.
Like other state-federal programs, for every dollar Wyoming spends on Medicaid, the federal government contributes a matching amount. Those kinds of matching funds can restrict lawmakers — if the state doesn’t spend, the federal government doesn’t match.
“There are some constraints within that budget … that are important to consider when looking at the budget overall,” Elizabeth Martineau, senior fiscal analyst with the Legislative Service Office, told the subcommittee in September.
Martineau pointed to, for example, the preschool services unit of the state’s budget.
“If you don’t meet that maintenance of effort, you could lose those funds,” she said.
Likewise, investing in community mental health services can save the state money in other areas, Andy Summerville of the Wyoming Association of Mental Health and Substance Abuse Centers, told the committee.
Community mental health centers are a large item in the department’s budget, Summerville said, but their budget has remained flat since 2002, mostly between $50 and $55 million per year.
“One of the unique characteristics of the community mental health centers is that part of the behavioral health redesign mission is diversion away from state institutions,” Summerville said. “It’s diversion away from the state hospital, life resource center, keeping people in their communities, working with the criminal justice population much more strongly now, trying to keep them out of jail or reduce recidivism.”
Separately, health officials and many county sheriffs are pushing lawmakers to support legislation to boost treatment for mentally ill people detained in county jails while they wait for a bed at the state hospital.
Pat Sweeney, a former Republican lawmaker from Casper, also testified to the committee. He was a member of the House in both 2017 and 2021.
“During the pandemic, Department of Health did an unbelievable job trying to manage that,” Sweeney said. “But did our citizens suffer because of it? Yes.”
Pendergraft asked Sweeney if he had “any large regrets” from the times the Legislature had to cut.
“I think we could have been maybe a little more strategic than across the board,” Sweeney said.
The subcommittee’s next meeting is Oct. 28 in Casper.
Correction: This story has been updated to correct the date of the subcommittee’s next meeting —Ed.