December Joint Revenue Report

Posted by kelli.little on December 6, 2017

By: Pete Obermueller, Executive Director

High drama at the Joint Revenue Committee meeting the last two days.  I mean “high drama” in the nerdy, I don’t have a life sort of way, but still....

As you may have seen in the news already, the committee did not pass the revamped bill to allow for a municipal only sales tax increase.  The new bill would have allowed any municipality to take to their voters an additional penny that could be used for general purpose, specific purpose, or economic development.  If a city were to impose a penny like this, it would not count against the maximum 7 pennies allowed county wide.  For example, if Cheyenne imposed an additional penny on itself, then Laramie County and the other municipalities would be at 6 pennies, and Cheyenne would be at 7 pennies.

WAM and the Mayor of Cheyenne testified in favor of the bill, the WCCA and Farm Bureau testified in opposition to the bill.  WAM argued that they need more authority and autonomy in raising revenue, and that this would lead to greater cooperation among the cities and counties.  Our argument was two-fold. First, that county residents should have the opportunity to vote for a tax they ultimately will have to pay.  Second, that allowing municipal only taxes, even without a cap, will ultimately consolidate revenue to the population centers.  Using the example above, once Cheyenne takes care of itself by adding their own penny, then county-wide pennies will no longer pass as Cheyenne residents will have no incentive to support a county penny that helps only counties or the other small towns.  It’s even worse for counties with only two municipalities.  In those cases, once the major city takes care of itself, its elected officials have no incentive to even allow a county-wide penny be put on the ballot in the first place.  Finally, how many times have we heard that we need to incentivize the cities and counties to work together.  The current process requires that all the elected officials get together a room and work it out.  It can get messy, its not easy, but they emerge with a plan that helps the entire county.  That is the model we want on local cooperation, and this bill takes us in the opposite direction.

Senator Kinskey: First, I don’t think the sky is falling with this bill.  Second, the entire reason for this bill is so that the cities could have their own revenue and stop requesting the $105 million in direct distribution.  The counties’ position is that they want us to raise taxes, provide the counties the $105 million, and they don’t want to have to make the hard decisions on raising taxes.  Aren’t we here because of the counties’ recalcitrance?

Answer: No! First of all, we have no authority to raise taxes, the legislature does that, so I don’t even know what you could mean by that.  If you want to talk about ways to actually replace the $105 million we are more than willing to do that, but this bill doesn’t do it.

Senator Case: The amount of dependency the local government has on state funding is too high.  A bill like this will help to reduce that dependency.  We have to do something about that.  And in terms of harm to county residents, these days when you can shop online and have delivery within 24 hours there is little need to go to the city for a purchases.

Answer:  To your first point, I absolutely agree that local government is too dependent on the state.  I even agree with my friends at WAM that local governments should have more authority and autonomy.  However, you have argued forcefully that in the case of municipal owned utilities that they should not have the sole authority to set rates outside the city limits, the same argument applies here.  We in Wyoming place a high value, at least in the case of local revenue, on voter control.  For revenue, we do not really have local control, we have voter control – and that’s okay.  But as long as that is the case then we need to allow for voters to vote for the taxes they pay.  As for buying habits, who knows how prevalent online shopping is.  I suspect that lots of folks are not quite as tech savvy as you are.

Rep. Madden:  I have seen it happen that one city doesn’t want another city to get a project and so sometimes things don’t get on the ballot.  Do you think there would be a way to set up a local option that if a city wanted to opt out, they could, but then they also wouldn’t get any of the revenue either?

Answer:  First of all, in your example it is a city blocking another city.  In my experience that has been the issue, cities opposing other cities.  The answer to that problem is not to x out the county.  Your suggestion should be discussed further, and I have other ideas on how we might move this forward collectively that I’m happy to discuss.  We could reduce the increments on the ballot, we could set up a sliding scale of city approval for ballot measures, but all of those need more discussion.

The bill died on a 7 – 7 tie vote.  I suspect it, or something like it, will emerge again this session.  One interesting side note is that among this committee there seems to be widespread support for the $105 million, but with a goal toward replacing it with something else.

After that, the committee moved on to discussing the various revenue raising bills they had been considering all year.  The long and short of it is that they passed only a cigarette tax increase – up to a $1.60 a pack – and an increase in the mark-up price the state liquor division will levy on liquor (not beer or wine).  The special taxes, like the beer tax, failed.

As for the major revenue raising bills, all of them were tabled until another meeting scheduled now for January 31, 2018.  The tabled bills include the travel and tourism tax bill supported by the Wyoming Restaurant and Lodging Association, the property tax assessment ratio bill, the statewide sales tax for school facilities bill, and the sales tax on services bill.  All of these bills can be found on Dropbox.  In addition it appears likely they will have another bill that would institute a statewide lodging tax as high as 6% or more.  While there was much grumbling among the assembled crowd about the committee still talking and not voting, I understand their strategy.  They want to wait to see how many cuts the Appropriations Committee makes, what the outcome of school recalibration is, and also the new CREG economic outlook.  With those three things in hand, they will have a clearer picture of the actual shortfall and can make a more informed decision on potential revenue.  So, it continues.

Finally, on day two Senator Case attempted to revive the wind tax discussion.  He offered an impassioned argument, but the motion to reconsider failed.  Be assured that this issue will come back. 

Then the CEO of WyoLotto gave a lengthy presentation to the committee on the operations, revenues, and transfers to the state of the lottery.  WyoLotto gave a rosy presentation, but the Revenue committee had lots of great questions, and I suspect that legislation will be forthcoming.  I have been working on a potential draft, but there are other options at play too, and it is too early to speculate further.

One last item.  The Joint Appropriations Committee has begun their hearings on the state budget.  You can find the agenda here or on Dropbox.  If you are interested in a particular issue or agency, you can listen live by going here. Keep in mind that if you are planning to work any particular issue, that the committee does not take public testimony during these hearings.