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Taxes

Revenue Committee looks again at corporate income tax

in News/Taxes
2062

A legislative committee is once again studying a proposal to impose an income tax on so-called “big block” stores.

The Legislature’s Joint Revenue Committee will take testimony on the proposal during its meeting in Pinedale this week. Members will decide whether to forward the bill to the Legislature during their meeting in November.

Under consideration is a measure similar to one killed in the Legislature this year. It would impose a 7 percent corporate income tax on companies with more than 100 shareholders.

In debates on the bill during the Legislature’s general session earlier this year, backers said national companies that do business in Wyoming have already built the cost of corporate income taxes assessed in other states into the price of goods sold in Wyoming. Supporters said the new tax would simply amount to Wyoming collecting its share of those taxes on purchases made in the state.

The measure is expected to bring another $45 million into the state and Tammy Johnson of the Wyoming Education Association said the money would go a long way toward funding education.

“(It is) the equivalent of funding 600 teaching positions for one year,” she said. “It’s the equivalent of funding a (Class) 3A school district for one year. It’s a lot of money. And it’s needed by the people of Wyoming to fund education, which is a fundamental right in Wyoming.”

Chris Brown of the Wyoming Retailers Association said his group just wants the Legislature to make sure any tax measure adopted is fair to all.

“Not one that picks winners and losers and treats businesses competing for the same customers different on a tax basis,” he said.

Johnson said since the companies that would be affected by the tax are already building the cost of taxes into their products, it just makes sense for Wyoming to collect its share of the revenue.

But Brown disagreed.

“To suggest that this is a tax that’s already being paid and Wyoming is just going to get its share back is incorrect,” he said. “Make no mistake, this is a brand new tax that, if this bill is passed, will be applied to some businesses in Wyoming and very well could translate down to the consumer.”

Peterson: How to fix Wyoming’s revenue struggles

in Column/Government spending/Taxes
Wyoming Government spending
1902

By R. Ray Peterson, guest column for Cowboy State Daily

While serving in the Wyoming Senate, I had the privilege of serving on both the Appropriations Committee for six years and as chairman of the Senate Revenue Committee for six years.  These two committees deal with the state budget through expenditures and revenues.

As I served, I was able to attend many state and regional meetings as well as review reports, and studies, all while having direct involvement in directing expenditures and revenue streams of our state.  These experiences allowed me insights and knowledge concerning our states budget along with growing concerns of revenue streams and how we will meet the expectations of funding state and local governments into the future.

The most recent developments of our coal industry in Wyoming should be setting off alarms with every elected official and citizen in our state.  Over the years, our state’s natural resources have subsidized a major portion of our taxes or revenue streams that we use to fund our schools and governments.  Over half of all revenues used to meet these expenses come from our mineral extraction industry. 

Learning from our history of our boom and bust cycles, our legislature has wisely put aside additional revenues from the high years to assist us during the low years.  This philosophy has served us well for the past 50 years in providing a more consistent budget, but the times, “they are a changing.”  The question now is, how long before our reserves are depleted?  Will our natural resources come back as they have in the past to save us yet another time? 

Wyoming, by our state’s constitution, must have a balanced budget.  Some would argue that we do not deficit spend in Wyoming while others would argue that we use the reserves to balance the budget which is, in a sense, deficit spending.  From my own simple understanding, when we spend more in a period than we take in, it is deficit spending. 

Although our budget is balanced in the end, we are still spending more than we take in during our low years.  Thanks to our cash reserves or “rainy day” funds and our investments, we seem to be holding our own while hoping that the revenue streams will return to higher levels. 

Today’s challenges are different

But today’s challenges to the budget are different than our past experiences of our boom and bust cycles.  Today, we face the strong possibility that coal will never come back to contribute to our revenues as it once did for our state.  The market has changed.  The demand has changed.  Unlike natural gas and oil, coal was a more consistent contributor to our states revenues with even slight increases from year to year, as amounts extracted increased with what the market demanded. 

But the demand for coal is decreasing for different reasons.  Although Wyoming has stepped up to produce cleaner burning coal technology to protect our coal’s value, other factors have weighed in that have had a dramatic effect on the value of coal. 

The war on coal was real and certainly had its effect.  More power plants have converted from coal fired to natural gas fired power generation.  But more importantly, consumer states of energy, such as California and others, have required energy supply companies to provide evidence that a majority of their power generation portfolio is derived from renewable sources such as hydro, wind and solar, or they will go elsewhere for their energy purchases.  The market is changing and because of this, Wyoming should be prepared and adapt with those changes.

Action is required

There are two principles used when budgeting in a shortfall.  Increase revenues or reduce expenditures.  Wyoming has done both without raising taxes. And there are other good things the state has done and continues to do.  As I mentioned, it participates with private energy corporations in developing clean coal technology as well as other cleaner burning fossil fuel efforts.  It also participates in the effort to develop new markets for our coal.  It has worked to create more transmission lines to deliver our natural gas and oil to market areas. 

These are things our state has done to try and increase or stabilize our revenues by strengthening the current resources we have.  The state has also used excess revenue of the good years to save and invest.  These investments, at times, provide additional revenues that are used to fill the budget holes left from the decreasing value of our market driven resources.  This effort combined with savings, have provided a long-needed stabilizing influence on our past boom and bust budget cycles.

Our challenge today

Our subsidy by mineral taxation has lightened the tax burden on Wyoming citizens over the years, but it has taken a hit, creating a shortfall.  The savings and investment of those savings are currently filling the shortages, allowing our state and local leaders time to make adjustments to their budgets. 

But reserves shrink and investments don’t always perform consistently.  The investment portfolio that perhaps saved our budget the year before could generate nothing the following year.  Trusting our trust funds is not the long-term solution to our shortfall problems. 

Most will argue that we need to reduce our expenditures.  I certainly agree with this position.  As with our own home budgets, we make less, we should spend less.  It should be no different with our state budget and over the last few years the state budget has been reduced in most areas.  But these are all short-term solutions to our current situation. 

What needs to be brought to the table are long-term solutions.  The solutions need to address the real problem of an inconsistent revenue stream, where nearly 60 percent of current revenues collected are market driven or out of our own control.  Wyoming needs to meet the challenge of reducing that market driven 60 percent, to 50 percent or even 40 percent of total revenue collected by the state. 

Now the question should be; How do we do this?

It’s time

By applying the two principles of budgeting in a shortfall of raising revenue and reducing expenses, I’ll offer one revenue increasing idea and two reducing expenditures ideas. 

A good start to the effort of stabilizing our revenue stream would be to pass a bill increasing the statewide lodging tax.   This increase would have the lowest effect on our tax payers and would be consistent to what surrounding states charge.   

For my ideas of reducing expenditures, I would suggest eliminating the $15 million annual automatic escalator for funding K-12 education.  I would also zero base the Department of Education budget and the Department of Health budget every ten years in the appropriations committee.  Stagger them to spread out the work load, but the two largest budgets in our state need more legislative scrutiny. 

These actions would be a good start in stabilizing our budget in Wyoming.

Tax numbers cast doubt on assumption of tough times

in News/Taxes
Wyoming economy
1820

By Bill Sniffin, Cowboy State Daily

Poor Gillette obviously is in the doldrums from mines closing. Poor Casper with all the downturns in the energy industry, is certainly lagging, right?

Not necessarily.

If you go by taxable retail sales, the conventional wisdom that Wyoming, as an entire state, is hurting just is not true.

The map showing the ups and downs of taxable sales for the first three months of 2019, compared to 2018, shows a far different story than what folks around Wyoming seem to believe.

Douglas and Converse County sales tax collections have increased by 64 percent, year-over-year.

Rawlins and Carbon County collections are up 31.7 percent, followed by Buffalo and Johnson County with gains of 31.1 percent and Rock Springs and Sweetwater County with an increase of 30.8 percent.

Cheyenne and Laramie County collections were up by 16.4 percent.

Gillette, with all its woes, saw collections increase by 12.7 percent in 2019 over 2018. And if those two mines are bought and the workers go back to work, things are going to be just fine in Campbell County.

Casper and Natrona County tax collections increased by 14.2 percent in 2019 over 2018.

So if all these places are doing so well, who is not showing an increase?

Pinedale and Sublette County have seen the steepest decline in tax collections, down 25.5 percent, which echoes the current slide in the natural gas production.

Lander and Riverton in Fremont County saw a collections decline of 7 percent.

Big Horn County (Greybull, Basin, Lovell) saw tax income drop by 6.4 percent and Thermopolis and Hot Springs County declined by 3.5 percent.

Laramie and Albany County are holding their own, down just 0.3 percent from 2018 and Lusk and Niobrara County are down by 1.5 percent.

Note: Please check out our additional story in the Cowboy State Daily featuring comments from folks living in these cities and towns.

Revenues ahead of estimates, though structural problems remain

in Government spending/News/Taxes
Wyoming taxes
1811

By Laura Hancock, Cowboy State Daily

Sales taxes, investment income, oil severance taxes and federal mineral royalties are proving to be the saving grace for state coffers, according to a recent report, but the overall revenue picture for Wyoming remains bleak.

In the first six months of the year, production of natural gas and coal – as well as prices for coal – came in below the state’s official forecast, according to the Census Revenue Estimating Group, made up of revenue experts from the legislative and executive branches of Wyoming government. 

CREG recently released a six-month revenue update for Wyoming, and compared those revenues against its previous official state forecast, released in January. 

At one time, coal and natural gas were counter-cyclical – when one was down, the other was up – which helped Wyoming absorb the booms and busts of a natural resource economy, and money continued to flow to keep state government running. 

But the July 31 CREG update underscored a new reality: Production of both commodities was down, and the income for two accounts that fund most day-to-day operations in state government would have also missed estimates had it not been for other forms of revenue. 

Revenue receipts to the General Fund, which is something of a state checking account, were $201 million or 16.9 percent ahead of earlier forecasts for the year due to higher-than-anticipated sales tax, investment and oil severance tax income.  

Receipts to the Budget Reserve Fund, which is akin to a state overdraft account, were 6.7 percent ahead of projections, thanks to severance taxes and federal mineral royalties. State Rep. Dan Zwonitzer, R-Cheyenne, said that Wyoming can’t always count on high returns on investments. 

“Future projections for investment returns are nowhere near where they’ve been the last four years,” he said. “They’re looking at 5.5 percent, 5.25 percent (rate of return) for the retirement system. We have some serious problems ahead of us.”

Zwonitzer is a co-chair of the Legislature’s Joint Revenue Committee, which is studying whether to implement new taxes, such as a corporate income tax or a gross receipts tax. 

The difference between the two? A corporate income tax is assessed on business profits, or income. Gross receipts taxes are levied on sales. 

Companies don’t pay corporate income taxes if their profits are zero or negative. But that’s not true with gross receipts taxes, according to the conservative Tax Foundation.

Forty-four states have a corporate income tax and four have a gross receipts tax, Zwonitzer said. 

Other taxes under consideration: 

  • A higher assessment against wind power generation
  • An increase of the statewide mill levy for schools
  • Increases for some property taxes
  • Adding a fourth category of property taxes – currently there are residential, commercial and industrial – which would consider multi-million dollar residential homes. “That would require a constitutional amendment,” Zwonitzer said. 

However, tax talk is tough in the Cowboy State, where people are conservative and used to one of the nation’s lowest tax rates. Previous tax proposals – such as requiring taxes be assessed on services including haircuts, real estate transactions and legal services – went nowhere. 

“Some in the Republican caucus say we need to be cutting services more before raising taxes,” Zwonitzer said. “They can’t identify where those cuts are” outside of education. 

Revenue bills must first be introduced in the House, where Zwonitzer said many proposals will likely gain the two-thirds vote necessary to clear introduction and be referred to a committee on budget years, such as the 2020 session. 

“I think we’re going to have some good discussions,” he said. 

Wyoming Legislature’s tax panel draws a crowd

in News/Taxes
1599

Wyoming’s legislators are examining several proposed new taxes and changes to existing taxes as the state’s coal industry continues its decline.

Members of the Revenue Committee, meeting in Cheyenne on Monday, reviewed several proposals that have been rejected by the Legislature in the past, including changes to the state’s wind energy tax, an increase in fuel taxes and a tax on large national retail stores.

Dan Zwonitzer, R-Cheyenne, the committee’s co-chair, said it is important that the committee study all options available to it to keep the state’s revenue stream stable, even if those options are unpopular.

“We’re going to be bringing something (to the Legislature’s 2020 session) and people probably won’t like it,” he said. “People don’t like taxes.”

The recent closure of two major Wyoming coal mines owned by Blackjewel indicates that it is time for the state to plan for different levels of coal production and how that will affect the state’s revenues in the future, said Buck McVeigh, acting chief of staff for Gov. Mark Gordon.

“The strife that’s facing our coal industry and that steady revenue player that we always counted on during the tough times with oil and gas, we’re losing that,” he said.

One proposal being considered is a corporate income tax that would be assessed against large retail stores with headquarters outside the state. Dubbed the National Retail Fairness Act, the tax is designed to account for the fact that the cost of goods sold by such retailers often includes an element for corporate income taxes assessed in other states. Backers maintain the measure would let Wyoming collect its fair share of the taxes paid by its residents.

The proposal was rejected by Wyoming’s Legislature during its recent general session and Senate Vice President Ogden Driskill, R-Devils Tower, said he is not sure any more support exists for the measure going forward.

“Some things just don’t know when to die and they get revisited and revisited,” he said. “That came out of left field pretty fast last year. I don’t think there was good understanding on either side of it.”

The measure has the support of the Wyoming Education Association because of the $40 million to $45 million it could raise annually.

“The National Retail Fairness Act is one step in the right direction to increase funding for schools,” said Tammy Johnson, the WEA’s government relations director.

The Revenue Committee continued its meeting Tuesday.

Wyoming’s 65th Legislature: General Session Review

in Agriculture/Criminal justice/Education/Health care/News/Taxes
1048

It’s all over for this year. Check out our bitesized rundown of what passed and what failed in the 65th Wyoming Legislature’s General Session. Stay tuned this weekend for more analysis on the session highs and lows with our Robert Geha.

Thanks for watching and be sure to follow Cowboy State Daily for our expanded statewide coverage of Wyoming news coming to your feed in the days ahead.

House begins final day by killing three bills

in Government spending/Health care/News/Taxes
Graduates toss their caps in the air, ALT=Wyoming to offer bachelors degrees at community colleges
1029

By Cowboy State Daily

The first three bills to be reviewed by Wyoming’s House on what was scheduled to be the last day of its 2019 general session did not fare well on Wednesday.

Bills addressing Medicaid eligibility, the payment of sales tax on large construction projects and the role of the state Select Committee on School Facilities in construction projects all died in their third and final reading on the House floor.

However, a bill designed to encourage students to pursue technical courses at the state’s community colleges was approved, as was a bill that would allow community colleges to offer bachelor’s degrees in applied science.

The Legislature scheduled itself to end its session on Wednesday. Legislators spent much of the day addressing Gov. Mark Gordon’s veto of 14 footnotes to the supplemental budget.

The House was the only chamber with regular business left to address — eight bills on third and final reading.

But SF 103, 114 and 144 all died on their final votes.

SF 144 would impose requirements for those receiving Medicaid assistance to either work, attend school or complete volunteer duty. The bill, which died on a vote of 39-20, would have exempted those with serious medical problems from the requirement.

SF 103 would have expanded the role of the Select Committee on School Facilities to oversee community college and state capital construction projects. It died on a vote of 51-8.

SF 114 would have allowed companies building industrial facilities to work out contracts for the payment of sales and use taxes on those facilities over 20 years. It was killed in a vote of 33-25.

However, in a session that ran well past 7 p.m., representatives approved SF 111, a bill that would let community colleges offer bachelor’s degrees in applied science, approving the measure on a vote of 51-8.

Also approved was SF 122, a bill that would provide grants for students wishing to pursue technical programs at community colleges. Dubbed the “Wyoming Works Program,” it would also provide funding for community colleges to offer such programs. Students would not be required to have a high school diploma to take part in the program.

SF 134, a bill that would provide exemptions for some oil and natural gas production from wells that had been shut down and then restarted, was also approved.

Senate kills lodging tax bill

in News/Taxes/Tourism
1004

By Cowboy State Daily (updated Feb. 25, 2019 at 7PM)

A measure that would have imposed a statewide 5 percent tax on hotel and motel stays was killed by the Senate on Monday.

Senators voted 19-7 against HB 66, a measure seen as a way to finance the state Tourism Division without dipping into the state’s main bank account.

The bill would impose a 5 percent lodging tax across the state. Money from  percent of the tax — estimated at $19 million a year — would have been used to pay for the activities of the state Tourism Division. The division would have received no more money from the state’s main bank account, called the “General Fund.”

The money from the other 2 percent of the tax would have gone to counties to replace tax income lost when their local lodging taxes expired.

Supporters promoted the statewide tax as a way to collect money from visitors to Wyoming to pay for tourism promotion. But opponents questioned the cost the tax would add to the expense of a hotel or motel stay.

Income tax, party switching dead, lodging tax alive

in Criminal justice/News/Taxes
992

By Cowboy State Daily

The last of three bills that would have put restrictions on when voters can change party affiliations was among a number to die this week as the Legislature neared the end of its general session.

Legislators looking to wrap up their general session by Wednesday put in long hour this week finishing their work on a number of bills, eliminating several controversial measures.

HB 106 was the last of three bills that would have set time limits for people to change party affiliation. It would have set a deadline of May 1 for such changes. It was defeated in a 14-11 vote in its first Senate review.

Another bill killed would have imposed an income tax on large retail companies headquartered outside of Wyoming. HB 220 died without getting a review in a Senate committee.

Moving ahead, however, was a bill that would set a statewide lodging tax of 5 percent. HB 66 is set for a final vote in the Senate on Monday.

Approved with significant changes by the Senate was a bill originally designed to create a felony crime for animal abuse. HB 235 was amended to remove all language about the felony crime.

Lodging tax bill moves forward in Senate

in News/Taxes
981

By Cowboy State Daily

A bill that would impose a statewide 5 percent tax on hotel and motel stays was approved in its first Senate review on Thursday.

HB 66 is set to receive a second reading Friday after senators voted 16-11 to approve it during the Senate’s “Committee of the Whole,” the full body’s first chance to review the bill.

If approved, the bill would require that money from 3 percent of the tax — about $19 million a year — go to the state Tourism Division. The division would no longer receive money from the state’s “General Fund,” its main bank account

Money from the other 2 percent would go to counties to replace income from their own lodging taxes when they expire.

Sen. Cale Case, R-Lander, tried with an amendment to eliminate the extra 2 percent tax, saying that would make hotel stays too expensive for in-state travelers.

“It’s just making it more expensive to stay around Wyoming,” he said.

But Sen. Bill Landen, R-Casper, successfully urged the Senate to kill Case’s amendment, arguing local communities should be provided with a steady source of income to promote themselves.

“That allows for local communities to have a little bit of leverage,” he said. “Let’s give it to them.”

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