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Legislature to review several tax bills in 2019

CHEYENNE — Start a conversation about Wyoming state government’s finances with lawmakers or outside observers, and inevitably the talk will move to the need for the state to diversify where it gets its money. 

Currently, just less than 50 percent of all state revenue comes from the mineral industry. That oversized financial dependence on mineral extraction has led Wyoming to feel every boom-and-bust cycle in the energy market. 

So diversifying the state’s tax structure has been a focus of state lawmakers for years now. And in 2019, Wyoming’s Legislature will have multiple cracks at it. 

There have been some big proposals that have made their way through the Legislature’s interim session. In 2019, lawmakers will be presented with a bill to raise property taxes by 13 percent to increase K-12 education funding by about $100 million annually, a bill to raise taxes on hotel stays in the state, and another to allow residents to create taxing improvement districts. 

Yet those big headline-grabbing items aren’t the only efforts to try and secure a steady revenue stream for state operations. There are half a dozen additional bills that made it through the interim process to get committee sponsorship. 

Whether or not those bills find any success in 2019 is still unknown. But for some members of the Joint Revenue Committee, which was the main conduit for many of the tax bills set to hit the floor in January, these are issues that need to be discussed even if they don’t have a chance of passing now. 

Throughout the interim process, Revenue Committee co-chairs Rep. Mike Madden, R-Buffalo, and Sen. Ray Peterson, R-Cowley, have been vocal proponents of the Legislature tackling the issue of taxation and diversification sooner rather than later. Peterson said even if the Legislature doesn’t pass the bills now, the work the Revenue Committee did in this interim session and previous ones will lay the groundwork for future changes when the state can’t keep cutting anymore and lawmakers are no longer able to keep kicking the can down the road. 

“When (mineral revenues) fall out, then we scramble. Regardless of how insignificant (the amount of money raised is) or how much the economy has come back, the problem in Wyoming remains the same,” Peterson said during a November revenue meeting. “And it always will be until we start sharing some of that burden and that load back (on the) personal taxpayers of Wyoming. Until we do that, we will always have this battle.”

Peterson said investing and cutting will only go so far. And then it will be on lawmakers to find solutions in the midst of a financial crisis. 

One bill sponsored by the Revenue Committee in late November would raise the state’s sales tax base rate from 4 percent to 4.5 percent, raising additional revenue that would be split between the state government and local governments where the tax was collected. Another sales tax bill supported by the Revenue Committee in November would put back in place the state’s sales tax on grocery purchases, while also lowering the sales tax rate by half a percent. 

One proposal would look to gas and diesel sales to help fund more than $72 million in unfunded construction needs for Wyoming’s roads and infrastructure. The proposed bill would attach the state’s fuel tax to the consumer price index.

If passed, at the beginning of every even-numbered year, Wyoming would check the consumer price index created by the federal Department of Labor for the last 24-month period. The fuel tax would be altered by the same percent the consumer price index has changed. The bill would also keep the fuel tax from going below $0.23 per gallon, which is the current fuel tax. Wyoming also imposed a $0.01 sales tax on fuel that goes toward the Leaking Underground Storage Tank account. 

One small bill that could have a large impact is one that would authorize the collection of sales tax from transactions made on websites like Amazon and Etsy. Wyoming already has a law on the books that allows for collection of sales tax on any sellers that make 200 or more transactions in the state or top more than $100,000 in sales. 

But the proposed bill would allow those electronic marketplaces to collect sales tax for those vendors and submit them to Wyoming. The bill would move the burden off the individual sellers to collect and figure out exactly what the rate should be on a sale that takes place in two separate states. 

“There is a very large hole, if you will, in our ability to collect those taxes. And that’s related to small sellers in marketplaces,” said Dan Noble, director of the Wyoming Department of Revenue. “It will make substantial difference in the amount of taxes related to this issue.”