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Bill Would Allow Wyoming Communities To Establish Airport Taxing Districts

in News/Taxes/Legislature

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By Leo Wolfson, State Politics Reporter
Leo@CowboyStateDaily.com

A bill that will be considered with the Wyoming Legislature convenes next month would allow communities to establish airport districts with the power to tax.

House Bill 40 would allow counties, if they choose, to ask voters to establish airport districts, which if approved would have the authority to tax up to 3 mills a year.

“It’s just another tool in the toolbox,” said Devon Brubaker, director of Southwest Regional Airport in Rock Springs. “It’s not a fix for every community.”

Brubaker said he started writing legislation to establish airport districts in Wyoming about three years ago and that, “It’s a topic that’s very near and dear to my heart.”

Not Profitable, But An Economic Driver

Aeronautics is not a glamorous industry in Wyoming. With 37 of the state’s 40 airports unprofitable, nearly all make the bulk of their annual revenue during the summer months.

But many communities get significant economic benefits from having local airports, which bring in thousands of visitors a year and allow their own residents to access out-of-state destinations with more ease.

“You take places like Cody, Jackson and Casper, the economic activity spurred by these airports is very important,” state Sen. Bill Landen, R-Casper, told Cowboy State Daily.

Brubaker said the state’s low population makes it difficult for most airports, aside from Casper-Natrona County International, Jackson Hole Airport and Cheyenne Regional Airport, to turn a profit.

“Wyoming is a rural state with small population centers that have less aviation traffic,” he said. 

Yellowstone Regional Airport in Cody, the third busiest airport in the state, typically runs a $300,000 to $500,000 annual deficit without outside funding.

Brubaker said for Southwest Regional to turn a profit, he would have to charge three times more than his current landing fees, which would make the airport one of the most expensive – if not the most expensive – in the country to land at.

“The misconception is airports get enough money already,” he said.

‘It’s Tough Out there Right Now’

Where their numbers end up in the red, local, state and federal governments step in to turn local airport budget sheets a profitable black. 

Local cities, towns and counties contributed more than $10 million to cover airport costs last year. 

A recent analysis by the Wyoming Department of Transportation shows that even after existing federal and state grants were accounted for, airports reported a combined $45 million in annual unfunded needs.  

“It’s tough out there right now,” Landen said. “It’s tough infrastructure-wise and for these airports to stay on top of all their demands.”

Air Guarantees

Also a critical lifeline for Wyoming’s airports has been the Essential Air Service agreement, a federal subsidy offered to commercial airlines to offer air service to small airports in the winter.

“That’s literally been a gold mine for these airports,” Landen said.

Beyond Direct Revenue

Wyoming airports generate $2 billion in economic activity statewide, including $37 million in Sweetwater County each year.

Brubaker said special districts that can tax for their local airports would allow local governments to concentrate more money on public services like fire departments and police. 

YRA, Southwest Regional and most other Wyoming airports lost a significant number of flights when the COVID-19 pandemic began. 

Brubaker said by late 2021, pre-pandemic flight levels had returned, but this was almost immediately followed by a pilot shortage that is still decimating the airline industry . 

He said although passenger numbers have mostly returned as well, airlines can’t provide enough staff to provide an adequate number of flights.

How The Tax Money Could Be Used

Airport districts could use tax revenue to pay for capital or operating costs, or other local facilities owned and operated by an airport owner or operator. It also could be used directly and substantially related to air transportation of passengers or the property. 

The legislation also will allow the special districts to issue bonds and take on debt. 

It caps the total amount of debt at 4% of the assessed valuation of the district. Any bonds must be approved by voters in the district and they can’t be longer than 25 years.

In Wyoming, 1 mill is equal to $1 of tax for every $1,000 in assessed value. 

For example, if your property’s assessed value is $10,000 and the mill rate is 75, your total annual tax bill would be $750. On a $350,000 property, 3 mills for an airport district would equate to $33.25 in taxes per year based on the state’s 9.5% property tax rate.

The actual annual amount an airport could receive ranges widely based on its location. 

At the top of the scale in Gillette, the Northeast Regional Airport could receive $13.6 million a year with a 3-mill tax based on 2022 assessed valuation. That compares to Niobrara County, where the Lusk Municipal Airport would receive a $121,014 a year from 1 mill based on 2021 valuation numbers.

Not A ‘Tax Bill’

“Some people perceive this as a tax bill,” Brubaker said. “It’s about local control. It’s for communities who are continuously facing rising costs to ask for a mill levy.”

If an airport district is created, voters in the district will be asked to approve or deny any proposed mill levies. 

“It’s a pretty steep hill to climb for any special district mill levy to pass,” Landen said.

Brubaker said similar legislation passed in a few other states like Nebraska didn’t allow voters to control tax increases.

Opposition

Rep. Clarence Styvar, R-Cheyenne, voted against a 2021 version of the bill and said he plans to do so again. 

One of the largest concerns he has is that there is no requirement saying what type of elections a special district could hold, an issue he is trying to regulate in a separate bill. 

Styvar brought up a few examples where special elections were held for taxes passed with extremely low voter turnout.

“Any bond should be done during the general election cycle,” he said.

Styvar is planning an amendment that would require all airport mill levies go before voters during a general election, but said he will still vote against the bill even if his amendment passes. 

“I don’t like special districts, they’re a slush fund with very little oversight,” Styvar said. “It’s just another way to take the taxpayers’ money.”

Airports Already ‘Functioning Fine’

Incoming Sen. Dan Laursen, R-Powell, also doesn’t like the bill.

“The airports seem to be functioning fine without taxing people more,” he said.

Brubaker, who supports the bill, said he would have to consult with local lawmakers and residents in his community about an airport mill in his community. He is not confident now would be the right time to ask Sweetwater County voters to potentially increase their taxes.

“I would support it when the time is right for the community,” he said. “A lot of people are struggling with inflation and the downturn in the economy.”

Failed Before

A similar bill establishing airport districts was proposed in 2021, failing on a 30-30 vote in the House after passing in the Senate. The current bill is the same that passed through the Senate then.

Rep. Landon Brown, R-Cheyenne, who voted it then, said although he doesn’t like the measure, will probably vote to support it this time around.

“We have so many special districts across the state, so adding another layer of districts tends to only make property taxes go higher when we already have high property taxes,” Brown said. “I also recognize that the majority of the people who need these airport districts are willing to pay so I would support this bill even though I don’t personally like it.”

HB 40 passed through the Transportation, Highways and Military Affairs Committee in May, which is sponsoring the bill.

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