Wyoming is facing a budget deficit mostly due to revenue shortfalls from energy companies and a loss in sales tax revenue. Lawmakers are starting to realize that they may need to raise money through taxes or fee increases. But while education funding has the attention of lawmakers, local government—specifically cities and towns—fear that they are being left out of the revenue conversation, and without more money communities will struggle to provide services.
Earlier this month the Joint Revenue Committee met to hold its first of a series of meetings on how to raise revenue to fund state services following a number of funding reductions.
Mineral severance taxes provide 70 percent of the state’s revenue. Because of the downturn in energy prices the state’s share of that money has decreased. Senate Revenue Committee Chairman Ray Peterson said it’s time citizens make up for that deficit.
“But we need more citizens’ participation in those revenue sources, in that revenue stream, to help us get out of this boom-bust cycle that we’ve been in for the last 100 years in Wyoming,” said Peterson. “It’s time we face reality.”
Local government is hoping to get its share of the money. But during the meeting, State Senator Dave Kinskey told some city officials that the courts have mandated that most new state revenue will go to education.
“And no matter how much it costs the legislature has to fund it and the legislature can’t use the lack of money as any excuse,” said Kinskey. “And quote…’all other budget considerations are secondary’…unquote.”
So where does that put local government? Cities and towns may be forced to implement their own tax increases. In Laramie, Mayor Andi Summerville said the City Council is kicking around several ideas.
“Beer tax or entertainment tax, things along those lines that the council could implement,” Summerville said. “We’re also looking at some of the exemptions, like right now professional services are now exempt from that sales tax. If you’re a lawyer or consultant, you don’t have to charge a sales tax for that bill. For Laramie that’s a pretty big thing, we have a pretty good brain trust in Laramie, we have some consulting going on there.”
Wyoming Association of Municipalities Director Rick Kaysen is kicking the tires on a municipal tax that could provide funds outside of a sales tax.
“Specifically for the residents within that municipality,” said Kaysen. “To raise revenues that would be able to meet some of the requirement and the needs within that municipality."
Kaysen said WAM is conducting a revenue survey to see what other states are doing. But this is not something cities and towns can do on their own. They will need legislative action to be able to generate their own revenue. Right now communities can impose and ask voters to support a sales taxes. Kaysen noted communities lose sales tax money when the state faces a bust—which has led to many layoffs and budget cuts across the state. Douglas Mayor Bruce Jones said the ability to raise local revenue is a must.
“The major concern is that if we do not have the capability of raising a tax, or being able to raise funds, then where are we going to get it from?” asked Jones. “If we have a downtick in sales tax and we have no help anywhere else, then we have to cut all of our services down, like we’ve been doing.”
Communities have had similar requests thwarted over the years for any number of reasons. Laramie Representative and House Minority Floor Leader Cathy Connolly was among those that didn’t want Laramie to be forced to raise its own revenue, believing that was up to the state. But she has changed her mind.
“I’ve become convinced that that’s reasonable and that the state restrictions on municipalities and county’s for raising their own taxes probably need to be lessened,” said Connolly. “And what we do here in Albany County and what Laramie might choose to do, might be different than what Cheyenne, Gillette, or Sundance chooses to do.”
In other words, if some places want to focus on fee increases,they can. If others want a specific type of tax, they can. The issue figures to get a lot more discussion before anything gets implemented. And it might backfire locally, where citizens may rebel when it comes to paying more for services. But Mayor Jones isn’t worried.
“It might be a political nightmare, but I’m not here because of politics, I’m here to do what’s right for my city.”
Members of the joint revenue committee seem open to changing the law. The committee will be meeting on the revenue situation for the next several months.