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Interior Dept. cuts mineral payments to 36 states

Ben Neary, Associated Press

CHEYENNE, Wyo. (AP) -- The U.S. Department of Interior is cutting federal mineral payments to 36 states by a total of roughly $110 million this fiscal year as part of the automatic federal spending cuts that started this month.

Wyoming Gov. Matt Mead announced this week that his state faces the biggest cut — at least $53 million over the next five months. Wyoming is the nation's leading coal-producing state and last year received nearly $1 billion in federal mineral payments.

The federal money helps Wyoming to fund state government operations. Income from energy production allows the state to avoid having personal or corporate income tax.

Mead said he plans to consult with other states affected by the cuts as well as with members of Wyoming's congressional delegation to try to restore the funding.

Even if the cuts remain in place, they're unlikely to have much effect on Wyoming state government operations. The state is on track to finish the current fiscal year with more than $1.6 billion in its so-called rainy day account and has billions more in permanent savings.

Pat Etchart, spokesman for the DOI's Office of Natural Resources Revenue in Denver, said the federal budget cuts require the Interior Department to cut payments to the states.

The federal government paid a total of $2.1 billion last year to the 36 states from revenues from energy and mineral production that occurred on federal land within the states as well as offshore.

"Cumulatively, approximately $110 million — or 5 percent of FY 2013 estimated disbursements — will be withheld from several states and counties where energy production occurs on federal lands during the remainder of the current fiscal year," Etchart said.

He said his agency was compiling a list of how much each state will lose. Counties where geothermal energy production occurs also will see cuts, he said.

Etchart said his office recognizes the cuts may impose hardships on states but it has no choice under the budget-reduction law.

Mead announced Tuesday that he received no advance warning from the federal agency of the cuts.

"As far as communications go, this method of passing along significant information that greatly impacts Wyoming gets a grade of F-minus or worse. It is not acceptable," Mead said. He said he has asked the Wyoming Attorney General's Office for advice on the state's options.