If state lawmakers don’t figure out a different way for cities and towns to generate revenue, Laramie will be unable to maintain and expand city services in line with its population and business growth, city officials said Tuesday.
Members of city staff and the Laramie City Council voiced their concerns about Laramie’s financial state as well as different bills currently being considered by legislative committees to Sen. Chris Rothfuss, D-Laramie, during a legislative meet-and-greet work session.
The group discussed ways Laramie can try to become more independent when it comes to revenue, something that concerns local lawmakers as the state’s financial outlook sours.
Unlike most states, Wyoming does not give any legal authority to municipalities to tax themselves for additional revenue. There aren’t many revenue options for cities at all, and Laramie relies heavily on legislative appropriations, including sales and use tax collections and mineral royalties, to fund essential city services.
Those appropriations aren’t what they used to be, however. Not only was the funding distribution model method changed in the 2016-2017 fiscal year , but the Legislature also reduced the total amount of funding awarded by half and axed the capital consensus program, all of which have put a strain on Laramie’s resources.
Not everyone has felt that sting, however.
The new appropriation model for municipal direct distribution funding has awarded some cities more money, including energy-sector-reliant cities like Gillette, Casper and Riverton, which saw increases of as much as 25.9%, 23.9% and 15.3% since fiscal year 2017, respectively.
Meanwhile, cities with stable growth and economies like Jackson, Sheridan and Laramie saw declines of 26.4%, 10.6% and 14% in awarded funds, respectively.
Councilwoman Jayne Pearce said the seeing the data made her, as a citizen of Laramie, feel less valued than a citizen of Gillette or other communities.
“I don’t think that’s a really equal distribution; I think it’s extremely unfair, and I think that needs to be heard,” she said. “I am less than somebody else because I live in Laramie in terms of funding from the state.”
The ongoing $2.2 million funding shortfall, Jordan told the council and Rothfuss, is causing city services to deteriorate faster than the city can maintain them.
For example, data just obtained by the city shows the city-wide pavement condition index is rated 64, which is the lowest rate the city has seen since 1988.
Consultants found the city needs to contribute a minimum of $6 million per year to keep that PCI from further deteriorating, but the city’s current budget barely stretches to $4 million per year for streets, even including the funds from the recently approved specific purpose excise tax.
The SPET funding is both a blessing and a curse; Jordan said city staff is having trouble keeping up with the extra workload from those ballot-approved projects and may have to spend extra funds hiring professional services like engineers to keep projects on schedule.
Additionally, the Laramie Police Department is currently operating at staffing levels similar to those in 1980, despite Laramie’s population growing 35% since then.
The city is even having trouble finding enough matching funds for grants.
“For this city, legislative solution is the only solution we have for our problems,” Jordan said. “Funding for cities is going to be important if Laramie is going to be able to keep doing what we need to.”
Rothfuss said it gets hard to gain other legislators' support for bills if only Laramie residents are impacted because the “reality is, the legislators care about their districts, and this is not their district.”
Additionally, it can be hard to gain support when only he and Rep. Cathy Connolly, D-Laramie, are the ones speaking for Laramie’s needs on each bill.
“It’s not sufficient that the minority leaders stand up and tout the importance of (a bill),” Rothfuss said. “We have six members of the Albany County delegation; every last one of them needs to be giving a speech on it, and if they don’t, you need to ask them why.”
The revenue shortfalls aren’t just a Laramie problem, though; Nine other cities have lost funding from distribution, and it’s starting to affect economic diversification efforts in the state.
Jordan noted adding jobs to Laramie actually hurts the city overall due to the adding cost of providing infrastructure and services to growing businesses and new developments.
This problem could grow bigger as Laramie is increasingly looked to as an integral part of the state’s efforts to diversify its economy, especially in the tech sector, something Rothfuss said should be emphasized to Gov. Mark Gordon and other legislators.
“Nothing we do with diversification based on the tax structure we have right now allows Laramie to generate any more revenue for Laramie, and yet the responsibilities, the requirements for emergency services, for roads, for water go up with that,” Rothfuss said.
Even so, when Laramie does attract companies in the tech sector, councilman Bryan Shuster also pointed out many of them don’t sell anything in Laramie. Ultimately “we need the retail sales” and the sales tax to be able to meet the demands on city services, he said.
The city’s sales tax revenue has been unchanged at about $10 million since 2008, despite adding almost 300 jobs around the same period, Jordan said.
One answer for the city’s revenue woes could be making the state distributions more equal among residents; Shuster noted even in the county, residents of Rock River are given more sales tax funding per capita than the residents of Laramie based on current funding distribution models.
Cities that are currently benefiting from the state’s funding model, however, aren’t going to be too happy about giving up the extra funds, Rothfuss said.
He added the state’s education funding model, which was mandated to be equalized at a state level rather than decided per district after a decision from the Wyoming Supreme Court, could be a model for a new way to organize the distribution.
Some potential small solutions are already being considered, including a bill sponsored in part by the Wyoming Association of Municipalities and the Wyoming County Commissioners Association that would make the fifth-penny tax permanent and allow counties and municipalities to potentially tax themselves with voter approval.
There is also interest among city officials to treat stormwater the same as water and wastewater by creating the ability for an enterprise fund, which could be used for stormwater improvement projects.
Ultimately, Rothfuss said it’s becoming increasingly clear the state as a whole needs a complete revenue structure overhaul and lawmakers need to become less scared of the word that big, three-letter-word that starts with T.
“Getting a good piece of legislation and then building that coalition and getting people so they’re comfortable voting for something that still has tax in the title is the problem,” he said.