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Leisure, hospitality… and taxes

What does it take to get the Wyoming Legislature to pass a tax increase?

Based on what we’ve learned from observing the Revenue Committee since May, two components must be present: the affected industry must loudly say it wants to raise taxes on itself; and the guy who stomps every tax bill into the dirt has to give it the nod… this one time.

Both of those elements are part of a tourism tax that is the most likely — and perhaps only — tax proposal to be approved next year.

Actually it was called a tourism tax until last week, when proponents convinced the committee its name should be changed to the “leisure and hospitality tax.” Several explanations were offered for the new moniker, but I think the real reason is politeness. While Wyoming certainly wants to wring more cash out of tourists, it feels rude to be so blatant about it.

Leisure and hospitality likely make visitors think they’re enjoying themselves so much they don’t mind paying a little extra for the pleasurable experience of dining, drinking, sleeping, sight-seeing, mountain-climbing, rodeoing and other such fun stuff within our borders. These visitors are not really Wyoming tourists, they’re guests of our beautiful state. Now show us your money!

The L&H tax won’t do much to solve the state’s $250 million annual shortfall in education funding. Supporters say the tax would bring in about $25 million per biennium, but it would be used in a rather inventive way.

The state now spends about $25 million every two years from the General Fund to operate the Wyoming Office of Tourism. A 1 percent statewide tourism tax is estimated to generate approximately the same amount of money. Relieved of the responsibility to fund the tourism office, the state would have an additional $25 million for other purposes, including funding education.

Why has the tourism industry practically begged the Revenue Committee to tax it, when all the other industry lobbyists in the state treat tax increases like the plague? There are at least three reasons, starting with the fact that the tourism industry would prefer a 1 percent statewide L&H tax over a 3 percent lodging tax the committee had also been considering. Secondly, the latter tax would have gone to city and county travel boards, not the state Office of Tourism.

Perhaps most importantly though, the new L&H tax is attractive because it would insulate the industry from the boom-and-bust cycles that cause revenues to dry up whenever the minerals industry hits a prolonged down period. That’s when state lawmakers start looking askance at the tourism office’s promotional budget. Under the new tax the industry could control much of its own funding fate.

Of the dozen or so tax proposals the Revenue Committee has reviewed, this is by far the most palatable one. This is largely because Senate President Eli Bebout (R-Riverton), one of the state’s most fierce and powerful tax opponents, surprisingly announced during the summer he would support a lodging tax hike.

Without Bebout’s blessing, an L&H tax would have zero chance of passage no matter how much representatives of the tourism industry wanted it. With the Senate president’s support, proponents will have far fewer anti-tax zealots to contend with in both chambers — and they’ll have been given tacit approval by conservatives like Bebout to vote in favor of the tax.

At last week’s Revenue Committee meeting in Cheyenne, Cochairman Rep. Mike Madden (R-Buffalo) once again provided his trademark dry humor to the proceedings. When it was time on the agenda to take up the tourism tax, he scanned the attendees and quickly announced, “Who wants to speak from the public? Seeing none, let’s move on.”

Then the industry representatives poured in, lining up to crowd both sides of the room. Madden knew they had been staging in the lobby and strategizing.

It was a highly coordinated, textbook lobbying event. Chris Brown, director of the Wyoming Lodging and Restaurant Association, stressed that tourism needs a sustainable long-term funding source. While some lawmakers have questioned whether dedicating the tax revenues to the state tourism office amounts to “earmarking” those funds, Brown said 34 other state boards, commissions and agencies already operate in a similar manner. “Why not tourism?” he asked.

Diane Shober, executive director of the state Office of Tourism, said any growth of the tourism tax fund beyond 3 percent per year would revert to the General Fund. The Legislature would still need to approve all appropriations to the office, dispelling the earmarking claim.

About 10 tourism folks each spent two minutes or less extolling the virtues of the L&H tax. A highlight of the testimony was bestselling Wyoming author C.J. Box, who noted he promoted international tourism to the state of Wyoming for 24 years before his first novel was a success.

Box said compared to surrounding states, Wyoming has by far the best tourism product, program and director. “But in the few years since I’ve left the tourism industry, the tourism office has fallen behind every competitor because everyone else has a dedicated funding source and we do not,” he said.

“It breaks my heart to see us fall further and further behind, year after year, when we actually have a superior product,” Box added. “I appreciate the fact this is the second largest industry here, asking you to please let’s tax ourselves so that we can benefit the rest of Wyoming and help diversify the tax base.”

Mike Moser, and the Wyoming State Liquor Association he directs, carry a lot of weight with legislators. So much, in fact, the state’s lowest-in-the-nation beer tax of 2 cents per gallon hasn’t been raised since its implementation in 1935. Mosher told the committee he doesn’t oppose the L&H tax and thinks it’s “workable,” with a few amendments that “concern the scope of the taxation” not being equal for everyone.

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The only person to speak against the tax was Brett Moline, director of public and governmental affairs for the Wyoming Farm Bureau Federation. The organization opposes all tax increases but really seems to have painted a bulls-eye on this one.

“If you were going to promote barley, the raw products we produce, the  beef cattle, maybe that would help us out,” Moline said. “I don’t see that this increase, the hundreds of dollars my federation will have to pay, will benefit my organization and my members.” Could it possibly be he’s never heard of the state Department of Agriculture, which performs precisely that task?

“I don’t think my stance surprises any of you,” Moline added.

“Not a bit,” replied Madden.

There is still a chance the Legislature could look favorably on increasing the so-called “sin taxes” — cigarettes, beer, wine and spirits. I think cigarettes are the best bet after tourism. Studies show an increase of $1 per pack gets a fair amount of people to quit smoking.

In today’s growing anti-tobacco atmosphere, having fewer smokers to foul up the air residents and tourists alike breathe would seem more hospitable to all. That’s what we’re aiming for, isn’t it?

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About the Author

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Kerry Drake is a veteran Wyoming journalist, and a contributor to WyoHistory.org. He also moderates the WyPols blog. He has more than 30 years experience at the Wyoming Eagle and Casper Star-Tribune as a reporter, editor and editorial writer. He lives in Casper.

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