Wyoming Legislature postpones great tax debate

Wyoming’s Great Tax Debate will have to wait until the 21st Century.

To nobody’s surprise, Wyoming’s Legislature rolled through its 1999 General Session in record time, mainly because it deferred action on major tax and revenue issues until next year’s Budget Session.

By then, legislators will have final recommendations from the special Tax Reform 2000 Committee, as well as the findings of a Joint Legislative-Executive Study of Revenue and Expenditures in tackling a perennial imbalance between revenue and expenses.

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This may be hard to fathom for readers in Colorado, where lawmakers currently are debating ways of refunding tax money to inhabitants. But it is the norm in Wyoming, where state and local government finances have been tight ever since the bottom fell out of the energy industry the first time in the mid-1980s.

With a new state school-financing formula adding more than $100 million a year to school spending, Wyoming lawmakers already are projecting a $130 million General Fund shortfall for the 2001-2002 Biennium, and it seems to be growing daily.

The Legislature two years ago commissioned a long-term look at state revenues by a public-private committee called the Tax Reform 2000 Committee, and legislators are counting on it to provide some guidance and help in increasing revenues.

(The committee’s initial recommendations have been somewhat panned, especially its suggestion that one largely untapped revenue source would be a corporate and individual income tax.

This year, the Legislature commissioned a major review of current revenues and expenditures with the hope of reducing the shortfall by reducing spending, or at least identifying for taxpayers what services could be lost if spending actually were reduced.

Legislators are hoping that recommendations from both studies will help them find consensus for measures that will cover the shortfall while not proving too politically incorrect in an election year.

While legislators deferred most major tax decisions until next year, a number of tax measures were considered and passed. The Legislature approved a new state excise tax on so-called smokeless tobacco (chewing tobacco) and other noncigarette tobacco products and removed the state sales-tax exemption on cigarettes.

On the tax-break side of the ledger, legislators approved a number of tax breaks and exemptions.

The big one was a temporary reduction in oil severance taxes and exempting the sales tax on electricity used in producing oil. That legislation will save oil producers an estimated $23 million this year and next, though supporters argue that without the incentive, many producers would simply shut down, costing the state even more in lost revenue.

Legislators also extended a severance tax reduction on high-cost and underground coal, the severance-tax diversion from the Permanent Mineral Trust Fund to the Budget Reserve Account, the tax-refund program for the elderly and disabled, and fuel shrinkage tax credits and ethanol tax credits. The Legislature also approved several sales-tax exemptions, including certain dental and medical products, aviation products, and manufactured homes.

With the absence of major revenue and budget issues, the big issue of the session was fine-tuning the new school-financing system mandated by a Wyoming Supreme Court ruling in 1995 declaring the state’s school-financing system unconstitutional.

The new formula provides aid to local school districts to ensure that every student has access to a basic education. Lawmakers added more than $25 million to current school spending, provided for a total block grant for next year of more than $651 million and approved an additional $38.7 million for local school-district construction and major maintenance.

That has a group of business trade associations expressing fears that Wyoming’s school-finance changes and increased spending for schools will force major tax increases next year.

The Association Business Coalition, which includes business, retail and agricultural trade associations, says this year’s legislative session was the “calm before the storm” and is warning that school costs may force an increase in the sales tax and property taxes.

Aside from the uncertainty over taxes, however, business generally fared well in the 1999 Wyoming Legislature, especially if one takes the position that the fewer new laws, the better.

Wyoming’s Legislature finished its 40-day General Session in just 36 days (saving the remaining four legislative days for next year’s 20-day Budget Session). Legislators introduced a total of 513 bills and resolutions – fewer than normal – and passed 213. Gov. Jim Geringer has now acted on all of them, vetoing five bills and allowing two into law without his signature.

Among the major actions were approval of a controversial “brownfields” environmental measure that would promote more realistic cleanup of industrial waste sites, statewide branch banking, a “KidCare” state health insurance program for uninsured children, the state’s first landlord-tenant law, changes to corporate licensing laws, a “prudent investor” rule, and increased fees for bad checks.