Tax Failure Was Not Unexpected

Feb 2, 2018


This week, after months of discussion, a legislative committee defeated a number of tax increase measures. The Joint Revenue Committee was hoping to find money to pay for a revenue shortfall that some thought could reach a billion dollars. Then a funny thing happened over the summer, the revenue picture improved just enough that taxes could be avoided. 

For a long time, it looked like things wouldn’t turn out this way and lawmakers started preparing the public for the first major tax hike in almost 25 years. They embarked on options from raising property and sales taxes, to considering some new tax ideas, to the usual discussion about imposing sin taxes on alcohol and tobacco. Then the state revenue picture changed. Gillette Senator Jeff Wasserburger said it surrounds two key areas.

“Our investment income is doing really well, our oil production is up.” 

And suddenly the deficit became less daunting. Wasserburger used to be worried that the legislature’s $2 billion reserve fund would soon be wiped out.

Senator Jeff Wasserburger
Credit Wyoming Legislative Service Office

“Two years ago I thought we were going to burn through our LSRA account, our rainy day account in three years’ time. I don’t believe that anymore. I think the rate of investment on our Legislative Reserve Account is pretty much the same and we know that we can take almost as much as $200 million out of that fund each year.”

Wasserburger says that he believes that could last ten years or more. 

House Minority Leader Cathy Connolly was certain that lawmakers would pass a significant tax measure for two reasons. One had to do with the shortfall and the other to finally stabilize Wyoming’s revenue picture.  State agencies had their budgets slashed and now education was in the crosshairs.

Connolly believed taxes would pass until late in the year when she heard lawmakers express relief over changes in the state revenue picture. To be clear the recent revenue forecasts showed that lawmakers would still need to use reserves, but the revenue was enough to put off the tax debate for a while

“One we saw that the revenue streams are up, that we can pay our bills tomorrow and not worry about schools opening in the fall, I’m not surprised. Disappointed but not surprised” said Connolly.

Even though the revenue committee voted several measures down, the tax hikes probably would have failed the required two-thirds vote needed for introduction in the House of Representatives anyway. Remember this is an election year and Connolly notes that taxes are tough for Republicans to support, even in the worst of times.

Cheyenne Senator Affie Ellis says if you are going to raise taxes, you better have a very good reason. That was made clear to her when she ran for office and went door to door.

“And you realize that families have plans for every dollar that comes into their house. And so if I’m going to tax those dollars, literally reach into people’s pockets I need to be able to look them in the eye and say here’s why these dollars are necessary and why government needs them more than you. And with education I don’t think we’ve gone through that process yet, I still have too many unanswered questions about how dollars are being spent.”

Lots of people share Ellis’s concern and believe they are still spending too many dollars outside of the classroom, but finding out how exactly how much is being spent has been difficult. She says getting a firm handle on education needs to happen before taxes are seriously considered.

“I think that has to be the first step because education is half of Wyoming’s budget. We’re talking about $1.5 billion.”

Senate Revenue Chairman Ray Peterson says citizens always ask him why they aren’t cutting more, but he says they have cut a lot.

That’s one reason he says finding new revenue eventually needs to happen because as the recent fiscal report shows, energy revenue is projected to drop off again.

“I’m still concerned as a revenue chairman of long-term solutions, our dependency on our minerals, the downturn…we’re still in it.”

And they aren’t raising enough current revenue to pay for their budget.

Wyoming Taxpayers Association Director Buck McVeigh says expanding the tax base is the key to raising more money. He says too many businesses are exempted from paying taxes. Sometimes that’s from a deal to attract a business and the other issue is many services or recreation businesses have never had to pay taxes.  McVeigh says that means citizens will have to participate.

“What we are talking about is looking at broad-based measures so that we can increase fairness among the taxpayers and get out from being so reliant on one industry.” 

Which will even out the boom and bust cycle. But when will they seriously consider these things, Senator Jeff Wasserburger of Gillette thinks he has an idea.

“When we spend all our savings, that’s when we’re probably going to do something about it.”