Senate President Eli Bebout will oppose any attempts to impose new taxes this legislative session, he said.
Any legislation that would raise new revenue must begin in the House of Representatives then win passage in the Senate, before going to the governor for his signature. There’s an anti-tax attitude in the House as well, but any tax legislation that does win its approval will run into stiff resistance if opposed by the Senate’s influential president.
Echoing comments made by Speaker of the House Steve Harshman (R, HD-37, Casper), Bebout said agency budgets and education funding need to be cut before the Legislature considers increasing taxes.
“Now it’s time to tighten our belts,” he said.
Pointing to the limitations of the current federal regulatory scheme, Bebout (R, SD-26, Riverton) is under no illusions the state will see a significant resurgence in mineral revenues soon.
The slow permitting process on Wyoming’s federal lands makes the state’s oil and gas resources uncompetitive, he said. Bebout has been involved in oil, gas, and uranium production in Wyoming for decades.
After fierce opposition from the outdoor sports community and environmental groups, Bebout recently abandoned a resolution for a constitutional amendment dealing with the transfer of federal lands to the state. Proponents believed state management would have helped minerals producers.
“We will hold our current legislation and continue our work with Wyoming’s congressional delegation and the new administration to push for local control and management of public lands,” Bebout said in a statement announcing his intention to drop the resolution this session.
For now, budget cuts should be paired with a responsible use of the state’s savings to survive tough economic times, Bebout said — already, the Legislature has spent $1 billion of its rainy day fund, the Legislative Stabilization Reserve Account, he said. It still holds $1.7 billion, which Bebout thinks that could last five to seven years if the state is careful.
“Why do you think we worked so hard to build the LSRA?” he asked.
A long-term effort to diversify the state’s revenue would take a committee dedicated to exploring new taxes over the course of an interim session, several lawmakers said. They remember the Tax Reform 2000 Committee, which was formed by the 1997 Legislature, during the state’s last energy bust. That group was made up of senators, representatives and officials appointed by the governor. Over two years, they examined the state’s revenue streams and tax structure with the goal of moving the state past the boom and bust cycle.
By the time the committee developed its recommendations, the bust had passed and the coalbed methane boom was on. The report was set aside.
The bypassed recommendations included creating a personal or corporate income tax, and raising property and sales taxes, Bebout said. He opposes both forms of income tax.
Bebout will introduce a bill calling for a committee this year, but it would have a broader focus than just taxes, he said. Unlike the Tax Reform 2000 Committee, Bebout envisions a committee focused more on economic diversification than new taxes. The committee would have to look for ways to update the tax structure to generate revenue from new economic engines, he said, whatever those engines may be.
Gov. Matt Mead’s staff director Kari Gray told reporters at the Wyoming Press Association Convention that her boss is not advocating any tax increases either. He wants to create a task force to foster a statewide discussion that involves educators, legislators and others to develop ideas to address the education funding deficit.
“He doesn’t want to unduly influence that discussion” by promoting new taxes now, Gray said.
Today, were the state to suddenly develop, for example, a couple billion dollars worth of tech industries, it would have no way to tax them, Senate Minority Leader Chris Rothfuss (D, SD-09, Laramie) said. The Legislature needs a discussion “that needs to not be concerned with our immediate shortfall but with the very nature of taxation in our state,” he said.
Such long-term thinking might be in short supply in the Jonah Center, the state’s temporary capitol, Rothfuss said. In his opening-day remarks to the Senate he talked about diversifying both the economy and the tax base, but he doesn’t harbor illusions that sentiment is widespread among his colleagues.
“Most people are just hoping for the good times to come back,” he said. They’re expecting the boom to follow the bust, as it always has in the past.
“We talk about the ‘rainy day’ concept as if, like the weather, it’s inevitable,” he said.
Waiting for the heat to come
Despite tax increases being proposed by House Revenue Committee Chairman Mike Madden (R, HD-40, Buffalo), House Minority Floor Leader Cathy Connolly (D, HD-13, Laramie) and a few other lawmakers, the Senate may not ever discuss tax increases.
There’s little appetite in the House for tax bills, Senate Revenue Committee Chairman Ray Peterson (R, SD-19, Cowley) said. The high number of freshmen lawmakers leaves that body vulnerable to the influence of lobbyists trying to protect their clients from taxation, he said. Lobbyists successfully killed a bill to repeal tax exemptions on certain industries, he said, which disappointed him.
Revenue bills are “just getting the crap kicked out of [them] down there,” he said.
Though Wyoming residents enjoy some of the lowest tax rates in the nation, most lawmakers think of their constituents as fiercely anti-tax. At the same time, lawmakers say that because of the state’s fossil fuel industry, the level of services citizens receive is out of proportion to what they pay.
A November poll from the University of Wyoming challenges that assumption, though not by much. The majority of survey respondents favored keeping government services at present levels or increasing them. 63 percent of those who favored increasing state services also said they were willing to pay for it. But they preferred higher taxes on cigarettes or alcohol, not property or general sales.
Madden and Connolly both have bills to increase taxes on tobacco, and Connolly also has a bill to increase the alcohol tax. Both Connolly’s taxes would direct the new revenue to fund education.
“I do think that if there’s a use of taxes they’re probably more sympathetic to it being used for education than some other possible use we might make of it,” Madden said.
At the same time, many legislators ran on libertarian or anti-tax platforms and got elected.
Before the Legislature can seriously look at new taxes it needs to reduce spending, Peterson said. “We’re gonna have to prove to the public that we’ve cut everything we can,” he said.
The public will be more willing to accept a tax “when they start feeling the pinch,” he said. “When the programs that they’re accustomed to go away.”
In his state of the state address, Gov. Mead said he did not think Wyoming citizens have felt the full effects of the $250 million he cut from agency budgets in June. Director of the Department of Health Tom Forslund has said the same thing, speaking specifically about health services. Peterson agreed.
Despite the governor’s assertion that further cuts are not necessary this session, Peterson said more certainly are coming.
“’Maybe sometime this summer, or next fall, legislators phones will start ringing,” Peterson said. On the phone, he suggested, will be a constituent whose child has developmental disabilities but programs to serve them no longer exist; or the caller might have a loved one who has been involuntarily hospitalized in the Title 25 program after diminished social services struggled to help them with substance abuse or a mental illness.
“They’re tough calls” to get, he said.
Then, maybe, the Legislature will feel there’s political will to raise taxes, he said.