The Legislature’s Joint Revenue Committee will again analyze ways to retool Wyoming’s tax structure leading up to its 2020 session.
When the Management Council approved interim committee topics last week, however, key legislators weren't predicting the 2020 session would be a watershed moment for new tax legislation.
“After this last year and, after hearing from the former revenue committee members, if the will of the body is not to take any of these tax bills on, they don’t have the strong desire to be beaten up in the interim in the press,” Rep. Dan Zwonitzer, R-Cheyenne, told Management Council.
Zwontizer co-chairs the revenue committee with Sen. Cale Case, R-Lander, who said that chairing the committee is a strange experience since he’s responsible for bringing tax bills that he might, as a “fiscal conservative,” oppose in principle.
During the 2019 session, the Senate killed the only two major tax bills passed by the House: the National Retail Fairness Act and a restructuring of the state’s lodging tax.
In discussions with the Laramie Boomerang, most of Albany County’s legislators said the Legislature’s failure to pass either bill is a major stain on the session’s legacy.
The need to retool the state’s tax structure is especially important, they said, in the wake of a 2018 study that found that economic diversification would compound the state’s budget woes unless the state’s tax structure were reformed to be less reliant on minerals.
Representatives in House took a major political risk by passing the National Retail Fairness Act, a corporate income tax on companies with at least 100 shareholders.
Senate Minority Leader Chris Rothfuss, D-Laramie, said he thinks his chamber's failure to act on the bill is only likely to deter House members from being willing to advance tax legislation in the future.
“I can say that having two reasonable pieces of tax legislation pass through the Wyoming House of Representatives with robust support was an unexpected sight and that gives me some confidence,” he said. “At the same time, the Senate was also expected to support that legislation and instead left the House members hanging in a way that they’ll no doubt remember and they’ll be reticent to repeat that in the future and have confidence in the Senate’s willingness to follow through.”
The 7 percent corporate income tax had the support of leadership in both chambers, and Rothfuss said the Senate “went back on some assurances” that were given to the House.
“You don’t make a lot of friends when you do that,” he said.
If legislators didn’t fear losing their seats over voting for new taxes, both tax bills probably would have passed, Rothfuss said.
“Those political considerations are a big part of the discussion,” he said.
After the Legislature increased the state’s fuel tax by 10 cents in 2013, a group of legislators who voted for the bill lost their seats during the next election.
That still weighs on legislators’ minds, Rothfuss said.
As the National Retail Fairness Act moved through the statehouse, the Wyoming Republican Party led a robust campaign against the bill, sending emails almost daily to party members, urging them to dissuade their legislators from voting for the bill.
“I think people misunderstood it, and some of that was that they they just didn’t read the bill,” said Rep. Bill Haley, R-Centennial.
Haley and Albany County’s four other legislators in the House all voted for both the National Retail Fairness Act and the lodging tax bill.
The lodging tax proposal died in the Senate on a third reading. Rothfuss voted for that bill, but Sen. Glenn Moniz, R-Laramie, voted no, becoming the only Albany County legislator to vote against either proposal.
“I will admit, we’re going to do something in the near future, but I base my decision on the feedback that I get from my constituents,” Moniz said, noting that voters he’s talked to have expressed a strong aversion to new taxes.
Currently, Wyoming’s lodging tax is 2-4 percent — depending on the county — and 2019’s lodging tax bill would’ve imposed a statewide lodging tax of 5 percent. The state’s share of the tax would’ve been used to fund the Wyoming Tourism Board and the Wyoming Office of Tourism.
Moniz said that structure made him uncomfortable with the bill and indicated that any new revenue streams “need to benefit the entire state, not just tourism.”
“I thought we needed to take another look at that another year,” he said.
Moniz never got a chance to vote on the corporate income tax bill, but told the Boomerang he had a “pretty middle of the road” position on the bill.
While he said he liked that the bill would mostly tax out-of-state companies like Walmart, he said he still worries about the state’s economy.
“In Albany County, the economy is kind of stable, but it’s not for a lot of counties across the state,” he said. “I just don’t think right now is the time to tax things.”
Backers of the bill promised that the much of the revenue wouldn’t actually be a new tax burden for corporations, and instead would be diverted from other states that currently tax corporations’ Wyoming income.
“Probably for Walmart, it probably makes no difference to them whether they’re paying it here or in Arkansas,” said Rep. Dan Furphy, R-Laramie.
The bill was projected to have raised $45 million annually for education, which Furphy said was a big reason he supported the bill.
“Not that I’m big on taxes, but we’ve got to fund education. We can’t keep spending our reserves,” Furphy said.
During his first two years in the Legislature, Furphy served on the Joint Revenue Committee.
This year, the retired banker was moved, at his request, off the revenue committee and onto the Joint Minerals, Business and Economic Development Interim Committee, which often handles banking issues.
Serving on the revenue committee can sometimes be discouraging work for legislators. Its members spend significant time each interim thoroughly vetting proposals they know aren’t likely to see much success.
“The revenue committee does some serious work and they put forward some serious proposal on revenue enhancements, and it’s a problem that some (legislators) get elected with their hands bound by no-new-taxes pledges,” said Rep. Charles Pelkey, D-Laramie.
Half of the Joint Revenue Committee members this interim are new to the committee.
Someone who doesn’t find the work futile is Rep. Cathy Connolly, D-Laramie, who’s returning to the committee for her third interim.
Someone needs to do the work, and Connolly said it might as well be her.
“I’m really committed to the work on the revenue committee,” she said. “I’m a left-wing Democrat. I’m a person who believes in Democratic ideas. This is my job.”
Connolly said she thought the lodging tax and National Retail Fairness Act “honestly had a chance this year,” she said.
Connolly said she’s hoping the discussions surrounding the two tax bills will only create momentum going forward.
“There’s something to be said for time,” she said.
This interim, the revenue committee plans to continue studying the possiblility of a corporate income tax, and will review other tax bills that failed this session.
The committee also plans to examine the possibility of new electricity taxation and exploring ways of “raising the valuation factor” for property taxes to conjure more revenue out of local mill levies.