Interest In Increasing Taxes May Be Waning

Aug 25, 2017

Credit Wyoming Legislature

Early this summer lawmakers were looking at a massive shortfall in education funding and overall revenue. That pushed lawmakers into a lengthy discussion about possible tax hikes. The idea was to hold a number of hearings over the summer on a variety of proposals and then pass bills that would raise $100 million, $200 million and $300 million. But a funny thing happened on the way to passing tax legislation the state’s revenue picture improved.

The July revenue report showed an improvement of over $140 million from what was previously projected. It showed capital gains were also soaring. It’s not a boom, but things look a lot better. The state still has issues funding education, local government, and other key services, something not lost on Governor Matt Mead.

“You know I want a great education system in the state of Wyoming, I want great roads in the state of Wyoming, I want safety and security and if we are not able to provide those things…that is exactly why the legislature is having that discussion.”

Mead has not called for tax hikes, but he has wanted options on the table. He says the state made massive cuts last year and he doesn’t want to cut budgets further. House Minority Floor Leader Cathy Connolly says the boom-bust cycle that caused the situation is bad for Wyoming. She says they need tax revenue to even things out.

“So even though the revenue streams that are coming in as of the July report are better than what had been anticipated, we still have a boom bust cycle that needs to be addressed. We are wholly dependent on the extractive industries if we choose to do nothing.”

Connolly even has some proposals, she wants taxes on tobacco and alcohol to stop being the lowest in the country and she wants other companies who operate in Wyoming to pay more. Especially those that are located out of state.

“We need to switch our reliance on oil, gas, coal, and think about other methods of corporate taxation. When you look at all the elements that go into corporate taxation, we are at the bottom of every one of them.”

Connolly serves on the Joint Revenue Committee that is looking at all the proposals. House Committee Chairman Mike Madden says the state needs to find a way to stabilize its income and they need a strong source of revenue like a sales tax. Madden says his committee will bring legislation for lawmakers to consider, but he has no idea whether they will be supported. If the Wyoming Taxpayers Association has its way, nothing will pass. Buck McVeigh is a former budget officer for the state of Wyoming and his organization believes more cuts are in order.

“We are not supporting anything at this point in terms of taxes until we really see a true across the board effort from all branches of government trying to reduce spending needs.”

McVeigh’s group has supported reducing the burden that the energy industry pays in taxes and to have people pay more, but even that idea is simmering as they look for more cuts.

Senate President Eli Bebout likes to say he’s just one of the Senators who oppose tax hikes, but being the Senate President gives him a lot of sway. Bebout led the Senate in an effort to try and cut education spending…something he wants to see more of. Bebout says Wyoming overspent on education and he wants to rein that in.

“To a level where A: We can afford it. B: It’s comparable to what other people are paying in the region and C: To get the results we think we should get and we aren’t getting, so until we get to that number I’m against any type of tax increase.”

Bebout does agree that the state could use more stable revenue. He’d like to see that money come from new business growth. Bebout is excited about the governor’s effort to diversify the economy. He says that’s something the legislature needs to invest in.

“I’m optimistic it will make some progress, but it’s going to be a longer term thing where I’d like to see us.”

Bebout does support some taxes to help with building new schools and to help municipalities raise money, but he wants lawmakers to give local people the authority to take care of those things themselves.

Senator Cale Case of Lander has proposed a wind energy tax, but he generally opposes tax hikes. However he admits that someday the state will need more money.

“So we are coming to a point where the legislature is going to have to do something. It’s going to probably going to be in combination with other robust cuts and actually, I don’t think it’s going to be this year, in this session. I think we might be riding through another session before we get a real significant tax proposal that’s moving through both houses.”

Case predicts that will be a sales tax or removing the sales tax exemption from food, something Bebout also supports. House Minority Leader Cathy Connolly remains optimistic.

Question: “So if I was to bet you $200 that no tax measure will pass this year, would you take that bet?”

Answer: “Laughs, I will take that bet. You know I am a Democrat in the Wyoming legislature, I am the eternal optimist.  It’s not that I want more taxes, but it’s truly the right thing to do and that we as a legislature will do the right thing.”

Question: “You really believe that?"

“I do.”