The powerful president of the Wyoming Senate, who led successful opposition to new revenue for education four months ago, told key lawmakers last week he remains opposed to new taxes.
Speaking “as a businessman as well as a senator,” Senate President Eli Bebout (R, SD-26, Riverton) told the Joint Revenue Committee and the Select Committee on School Finance Recalibration he hoped “as you move forward and do your work that [tax increases] would be the last option.” Bebout made the remarks when the committees met in his home town of Riverton.
The remarks would seem to contradict the Revenue Committee’s principal goal for the interim period between legislative sessions, which is to find new funding sources for public education. Bebout sits on neither committee.
Bebout, however, said he spoke for his constituents, and others around the state. “I think the silent majority agrees with me,” he told WyoFile in an interview.
The minority party leader in the Senate wasn’t so sure. “We don’t really have a sense of what the public is interested in with regard to tradeoffs between educational cuts and whether they want to raise taxes,” Sen. Chris Rothfuss (D, SD-9, Laramie) told the committees. He said filling in that knowledge gap could be a goal for the revenue committee.
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A poll conducted before the last legislative session suggested that citizens don’t want to see a cut in spending on public education, but do not favor tax increases either.
Today, Wyoming residents don’t pay nearly as much in taxes as they receive in services. Several weeks ago, Senate Vice-President Michael Von Flatern (R, SD-24, Gillette) estimated that a family of four in Wyoming pays roughly $3,000 in taxes, but receives about $30,000 in services. The difference is made up by taxes on the mineral industry, which until recently have generated enough to keep citizens’ taxes low.
The taxes that citizens would see raised — on alcohol and tobacco — don’t generate nearly enough revenue to make up for a mineral-revenue slide, a University of Wyoming political science professor said. For lawmakers, that doesn’t leave many popular solutions.
November survey
In November, 2016, a UW survey found that 44 percent of respondents wanted higher spending on public education, while another 44 percent wanted to keep public education funded at current levels. The survey, which also asked questions about government spending on streets and highways, prisons, law enforcement and water infrastructure, found spending cuts weren’t popular. Less than one fifth of respondents showed a preference for reducing government spending, regardless of the policy area they were asked about.
Researchers have asked the same questions of the public intermittently over the years, survey director and UW political science professor Dr. Jim King said.
“The general pattern in the 2016 survey reflected the findings of previous surveys,” King wrote to WyoFile in an email. “People want to increase or to maintain spending levels for popular issues, such as public education,” and reducing spending is rarely the most popular option. But residents haven’t shown much appetite to pay for maintaining spending either.
In the survey, 85 percent of respondents thought state taxes were “generally reasonable,” while 8 percent found them to be too high.
“The taxes people prefer to see raised are taxes that generate little revenue,” King said, “and could never provide the funds necessary to offset decreases in other taxes or increases in expenditures.”
Most popular in the November survey were raising taxes on beer, alcohol and cigarettes, often labeled by lawmakers as low-hanging fruit. Nevertheless, attempts to raise such “sin taxes” failed last legislative session. Even if they had passed, the new revenue would have been woefully short, given a deficit in education funding now estimated at $478 million for the coming biennium.
Increasing the tobacco tax by 2 cents a pack would only raise $600,000 in additional annual revenue. Suggested tax hikes on beer, wine and liquor would only produce $1.7 million, according to information the Legislative Service Office presented June 12.
Taxes that are less popular raise more. Increasing the sales and use tax by 1 percent would generate $154 million in its first fiscal year, LSO reported. Dropping a sales tax exemption on the purchase of food would bring in close to $29 million. Property tax increases would take longer for the state to implement, the LSO said. Various property tax increases considered in Riverton wouldn’t go into effect until fiscal year 2020, and would raise annual amounts of between $20 and $50 million.
Raising the severance tax on the struggling mineral industry by 1 percent would bring in $91.3 million, the LSO said. In the UW survey 52 percent of Wyoming residents favored this tax increase.
Taxes that would affect individual residents, not industries, however, are unpopular with residents, or at least were in November. “Clear majorities opposed increasing property taxes (80 percent), the sales tax (59 percent) and the gasoline tax (58 percent),” the survey researchers wrote.
Read about sales tax exemptions — repeals of which were also discussed last week
Since the survey, the education funding crisis has made headlines across the Equality State. King, however, didn’t think increased attention would substantively change residents’ opinions. “A common perspective is that governments waste a great deal of money and that eliminating waste … would provide the funds for preferred programs,” King said.
“Budget numbers such as $400 million are abstractions,” he said. “Reality doesn’t kick in until schools must eliminate elective [classes], athletics, or services citizens expect.”
If true, that attitude could support lawmakers who oppose tax increases, and think fighting them will boost their rapport with voters. The subject has already proven potent fodder in Republican primaries.
Rothfuss, the top senate Democrat, said he believes cutting public education budgets would be more unpopular than new taxes. “I’m absolutely certain that my constituents would prefer to raise taxes than to cut education,” he said.
Rothfuss’s Senate district includes the university town of Laramie, and he is a UW lecturer. His district could be different from others; voters recently increased property taxes for improvements to the high school beyond what the state would pay for. But he said he believes the majority of the state does not want to see education cut.
“This state values its quality education,” Rothfuss said. With only unpopular choices, lawmakers must have “political courage” if they’re going to solve the education funding deficit.
“I think we’ve been failing at our leadership in regards to this problem for a number of years,” Rothfuss said, noting that the current revenue crisis had built up over time. “The voting public never seems to punish anybody for voting against new taxes, but that doesn’t mean it’s the right thing to do.”
Many lawmakers talked last week about a compromise that would meld budget cuts and revenue increases of some kind. Speaker of the House Steve Harshman (R, HD-37, Casper) told the committees that if the compromise bill from last session had passed, they wouldn’t be meeting. He repeated his frequent assertion that “everything is on the table.”
Compromises can be a tough sell during elections though, when candidates tend to be judged on their stands for or against single issues. Senate Revenue Committee Chairman Ray Peterson (R, SD-19, Cowley) joked about his next campaign slogan at last week’s meeting.
“I’m Senator Peterson and I’m the one raising your taxes and cutting your wages,” he jested. “Vote for me.”
Other lawmakers wait in the wings
The committees leading interim work to resolve education funding are only a portion of the Legislature. The Education, School Finance Recalibration, and Revenue committees have 29 lawmakers, just under one third of the 90-member Legislature.
Because of legislative rules, any bills the three committees propose that raise new revenue would have to begin in the House in 2018’s budget session. There, a group of conservative house members opposed any tax increases in 2017, even before the Senate stripped what few revenue-raising measures the House did pass out of the education funding bill.
One of those lawmakers, Rep. Chuck Gray (R, HD-57, Casper), said he believed solons on the Recalibration Committee were ignoring “conservative solutions” that could address the funding shortfall. During the 2017 session, he proposed a bill to establish education savings accounts, which encourage the growth of private schools by letting parents apply for state-funded scholarships. “Education Savings Accounts would bring a tremendous savings to our state while also improving educational outcomes,” Gray wrote in an email to WyoFile.
Last April, on a radio show Gray runs in Casper, he said the competition from private schools would push public schools to better perform. The House Education Committee killed his bill, 7-2. Opponents worried it would run afoul of language in the state constitution that prohibits public funds being directed to private education, said Rep. Landen Brown (R, HD-9, Cheyenne), who sits on that committee.
Gray persists. “The Recalibration Committee needs to start looking at conservative solutions for our state,” he said. “This discussion has been mostly monopolized by the discussion of tax increases.”
Constituents support his fight against higher taxes, he said. “This is Wyoming, not California. My constituents work hard, and they don’t want government to take more of their hard-earned dollars.”
Revenue options
Below are revenue enhancement options presented to the Joint Revenue Committee and the Select Committee on School Finance Recalibration on June 12. For the full report click here.
Wyoming is one of only four states without a corporate income tax.
What if we consider it a tax on all of those “persons” who put more than a certain amount of wear and tear on public goods like roads?
The Governor needs to show some leadership on the issue.
Sen. Bebouit says ‘ raising taxes should be the last resort “. He’s right, and thanks to him and his Republican cabal of solons, were are standing at the front gate of The Last Resort. Wyoming’s GOP leaders can no longer be the handmaiden of industry and coporations when our survival is at stake. Too long has Cheyenne allowed industry to write the bills, set the board , and fence out the opposition by whining that raising taxes will hurt or drive off business. That is a bald faced myth. The taxes are always paid by the end consumer of whatever product is being produced.
State’s Exhibit A : back in 1998-99 , just before the latest and longest Coal Boom became a reality. the Wyoming legislature was grappling with shortfalls then as now. They commissioned a study on the effects of severance taxes and other taxes on mineral production. The studyw as conducted not by industry or a professional study firm , it was done by Professor Shelby Gerking and his faculty and grad students at the UW school of economics. As near as can be told, this comprehensive study it was NOT subject to outside influences or constraints handed it by the legislature or lobbyists or anyone in industry . It was academic, and went where the data led it.
The result ? Increasing severance taxes and royalty fees etc. did NOT adversely effect businesses. Higher taxes did not halt mining, did not stall out drilling, did not crimp sales of coal, oil, gas, trona yada yada. New or higher taxes were shown to not impede business development. Uh-oh… not the expected outcome, was it ? Gerking’s team slayed the big bad tax ogre.
The Legislature took one look at their own study , and promptly BURIED IT.
And here we are…
Uh, hello? Anyone there? Let’s finally face the grim reality that’s been out there for quite awhile now so should be no big surprise, coal ain’t ever coming back, period. Anyone else tired of hearing a whole boatload of tax proposals, some inane ones there, to cover the lost revenue of the extractive industries? Wyoming has paid their debt to those industries many, many times over, giving them what effectively has become, power over our state politics, state budget, state university, and the loss of thousands of acres of our beautiful and irreplaceable landscape and increasingly important animal migration corridors. And Wyoming’s residents have been basically powerless to combat the wheeling-dealing behind closed doors actions by industry and a number of our home grown power players, that has resulted in the budget crunch we face today, and not for the first time but hopefully the last.
We need a state income tax plain and simple. It’s long overdue, and would hopefully put an end to our mix of good and incompetent legislators’s annual attempts at avoiding the room’s large elephant by turning and twisting that body into Houdini-like contortions that solves little.
Those lame brain machinations have become very old, especially at the crucial crossroad before us today.
I don’t need a survey, nor do many other Wyoming residents, to solve the tax quandary. Face the obvious and also realize that a state income tax-free Wyoming is not a state birthright just as it is not essential that forever and ever industry will pay the freight for education and many other essential services. And when they don’t, our young citizens will suffer from the inferior education they’ll receive in a state that refused to accept the responsibility for its long held but miguided belief and poor solutions crafted by the legislators we elected.
How about cutting ALL sports programs out of schools, colleges, and the University? If you want to go see nonprofessional sports, then get sponsors in the business community to pay for venues, coach and ref salaries, uniform purchases, per diem for team travel expenses, and charge entrance fees to attendees to the events. When I was a child we had booster clubs, held bake sales, and car washes as well as soap scrimmages. What happened to those things?
Has anyone analyzed the revenue that would be collected FROM a personal income tax that applied only to very high incomes, for instance, SOMETHING LIKE the following marginal tax rates on the following amounts of federal “taxable income,”: 4% between $200,000 and $499,999; 5% between $500,000 and $699,000; 6% between $700,000 and $899,999, and 7% on amounts over $899,999. (Taxable incomes less than $500,000 would not be taxed.)
Is there any other way to boil this article down than, “We want government to continue to provide all the services we have come to enjoy, but we don’t want to pay for it.”? So-called “conservative” voices in Wyoming politics have long had a well-developed response to such attitudes; phrases like “sense of entitlement”, “multi-generational dependency”, and “freeloaders” come easily to mind. Time to “cowboy up” folks, to use another popular phrase freely applied to others, but not ourselves.
I own six pieces of real estate in Wyoming and two in Montana. I do not want real estate taxes here to get as high as in Montana but there is plenty of room to increase property taxes in Wyoming. Our sales tax rate is very low in comparison with most states and we have no personal or corporate income tax. We can’t keep piling the burden on the mineral industry to subsidize personal exemptions from paying our fair share for public services.
We can increase property taxes on personal and commercial real estate and grant partial exemptions to the elderly and veterans.
Ranchers are paying property taxes based on grazing value and are charging hundreds of thousands of dollars per year for oil well sites and ranch roads. Typical rates paid for drill sites are $2500 per acre per year for ten-acre sites; typical rates paid for oil companies to use ranch roads are $4000 per mile, often paid separately by six to ten operators. An increase in property tax is not going to make their operations unprofitable.
The increase in property taxes for ranches would be fine for some, but not all. Not all ranchers have oil well drill sites on their property nor do all of them have roads that oil companies use. It would be unfair to assume that all ranchers can afford to take a tax increase if not all of them are receiving mineral rights or surface damages from oil companies. Some ranchers still do it the old fashion way and make their living off of their livestock and the land they work.