The Joint Revenue Committee gathered in Saratoga on May 11 and 12 to discuss finding new revenue sources to fill a gap in education funding. A gross receipts tax faced opposition from industry representatives, but committee members pressed forward with the idea nonetheless. (Andrew Graham/WyoFile)

With the specter of education’s funding deficit looming over them, lawmakers on the Joint Revenue Committee voted 11-3 to consider a gross receipts tax on businesses, despite heavy opposition from lobbyists.

The committee discussed the new tax — which the Legislative Service Office estimated could raise $90 to $100 million in annual revenue — May 12 in Saratoga. Corporate accountants and representatives of Wyoming’s chief trade groups all argued against it.

A gross receipts tax is a tax paid by businesses on the income they make. Essentially, it is a tax on the money a business makes from each sale of its goods and services. The LSO estimated that at a flat rate of 0.26 percent across all industries, a gross receipts tax would raise $90 to $100 million annually for the state. However, it’s likely some industries would be exempted, lawmakers said. The idea is being proposed by freshman Rep. Jerry Obermueller (R, HD-56, Casper).

Lobbyists argued the tax was oppressive to industry and would hurt Wyoming’s attempts to grow and diversify its economy. The tax would hit end consumers in a way that isn’t transparent — unlike like a sales tax that appears on a customer’s receipt, they said.

Sen. Affie Ellis (R, SD-8, Cheyenne) and Reps. Dan Laursen (R, HD-25, Powell) and Timothy Hallinan (R, HD-32, Gillette) voted against the idea.

House Minority Floor Leader Cathy Connolly (D, HD-13, Laramie) voted to advance the gross receipts tax even though she worried about its transparency. However, she said in an interview, her concerns are for now outweighed by the idea that the committee had to rethink Wyoming’s tax structure.

“We need to address what other Legislatures in all honesty have not had the appetite to do,” she said.

The committee leadership also vowed to consider many other tax categories in subsequent meetings, from property taxes to sales taxes to “sin” taxes on alcohol and tobacco.

It’s a change from revenue committees in years past, said veteran committee member Rep. Mike Madden (R, HD-40, Buffalo). “Last year [lobbyists] had a committee that promised they wouldn’t talk about taxes,” he told WyoFile. “They’re talking about it now.”

From left to right, Sen. Cale Case, Senate Revenue Committee Chairman Ray Peterson and House Revenue Committee Chairman Mike Madden. (Andrew Graham/WyoFile)

The committee has been ordered by the Legislature’s leadership to review new and existing revenue streams for public education and help the state solve a $400 million shortfall in that funding. To accomplish the goal, the leadership voted to budget five more days’ work for the revenue committee.

“Taxes are bad, we know that,” Senate Revenue Chairman Ray Peterson (R, SD-19, Cowley) said at one point Friday, in apparent exasperation at the continued lobbying against the gross receipts tax.

“Tax is bad for our economy, we know that [too],” Peterson said. “This committee has the dirty, crappy job of talking about new taxes. God bless our management council, our leadership, they’ve given us five extra days to do this crappy job.”

Lobbying in lockstep

Before the vote on the gross receipts tax, the committee faced a deluge of lobbying against it. Revenue committees tend to draw relatively big crowds for legislative committee meetings, and those are largely dressed in suits and business attire. Many attendees represent Wyoming’s principle industries, and there is frequently lots of expert testimony. But there’s little of the impassioned public testimony that occurs at meetings dealing with hot-button social issues like gun laws or public lands. By the time the gross receipts tax was discussed some of the crowd had left and no one testified in favor of it.

“What would be more unifying among the business community then being against a gross receipts tax?” Connolly said in an interview last week.  

David Pope, a Cheyenne-based accountant, began the parade of lobbying by saying people of most political leanings should dislike the tax. “Conservatives should really dislike this,” he said, “it hurts activity in emerging economies like Wyoming wants to be.”

In a white paper presented to the committee, he argued that gross receipts taxes create a pyramid effect, where a cost is added at each level of the production cycle. So with a gallon of milk, for example, a tax is added when the dairy farmer sells the milk to the dairy, when the dairy sells the milk to the wholesaler, and again when the wholesaler sells it to the grocery store. The total of all that tax comes down on the milk’s final purchaser. With the flat rate mentioned by LSO, that would mean 0.26 percent would be added to the milk’s cost at each of those sales.

Liberals should dislike the gross receipts tax too, Pope said, because it’s a regressive tax. A regressive tax is one that affects lower-income payers relatively more than those who are wealthy.

Economists should dislike the gross receipts tax, Pope said, because it is hidden. In other words the tax gets embedded in the cost consumers pay, unlike the sales tax clearly labeled at the bottom of a grocery store receipt.

Finally, Pope said, “accountants should dislike it, because of the complexity it adds to clients’ lives.”

Rep. Jerry Obermueller (R, HD-56, Casper)

Obermueller has said he would like to use the gross receipts tax to collect revenue from out-of-state companies that do business in Wyoming and currently aren’t taxed. He hopes the eventual bill could spare Wyoming-based companies, though LSO staffers warned such a move could run afoul of the interstate commerce clause of the U.S. Constitution. The clause says regulating any trade between the states is the purview of the federal government, not the states.

Pope said he would like to see how much revenue loss was actually occurring from not taxing out-of-state companies. “I would very much like to know what the extent of the problem truly is,” he said.

Peterson estimated that leakage to be in the millions. “I refer to them as pirates,” he said of untaxed out-of-state companies. “They rape, pillage and plunder and then leave the state and never come back.”

Pope argued that Wyoming’s low-tax environment — without a gross receipts tax — would draw companies that create jobs. Employees will then pay Wyoming taxes, he said.

Pope was followed by Brett Moline representing the Wyoming Farm Bureau, who opposed the tax. So did Travis Deti with the Wyoming Mining Association, and Bruce Hinchey with the Petroleum Association of Wyoming. Most in opposition described it as a truly bad idea for the state’s struggling economy, that would prevent growth and continue the current downturn.

Obermueller repeatedly asked those lobbying against his idea to provide an alternative for how they could collect on out-of-state companies doing business in Wyoming. For the most part, those testifying said the state should look at property and sales taxes before they consider a gross receipts tax, and should look at cutting government before they look at taxes at all.

“Decrease one dollar of expenses and you add one dollar to your bottom line,” Pope said. “Do we have the most efficient State Government we can have?”

Sen. Cale Case (R, SD-25, Lander) questioned the pyramid effect described by Pope, and urged the committee not to be swayed by the testimony. “We’re just hearing things that are thrown out there,” he said. “We really gotta dig down and analyze what is right and wrong.”

Obermueller was not satisfied with the answers from lobbyists either. “We haven’t heard any alternative ideas,” he said before the vote. “Absent any alternative ideas I’d like to see this one move on.”

After the vote, Rep. Mark Kinner (R, HD-29, Sheridan) approached a group of industry representatives who had lobbied against the tax. You have to come up with solutions, not just problems, he told them.

“My main message to a lot of folks is don’t just say ‘don’t do that,’” he said in an interview, “give us some ideas and give us some options.”

Legislative mandate

The revenue committee has until November to come up with potential solutions for the education funding crisis. During both days of the Saratoga meeting, committee members and the chairmen pointed to that mandate from leadership as support for the loathed-in-Wyoming notion of raising taxes.

Peterson alluded to the unpopularity of the task revenue faced. “People around this table may want to think twice about running again,” he said, referring to his fellow committee members. “Our names, our pictures are going to be targets everywhere in the state because we have this assignment.”

Senate Revenue Chairman Ray Peterson (R, SD-19, Cowley)

During the 2017 legislative session, bills or amendments to raise taxes would drive anti-tax lawmakers to call for a roll call vote, putting votes on the record.

Some lawmakers signed a pledge during their election campaigns not to increase taxes. The pledge was circulated by the libertarian Wyoming Liberty Group. In the past, voting records on tax increases have been political ammunition against moderate Republicans in primary fights. For example, during the notable upset by Rep. Bo Biteman (R, HD-51, Ranchester) of long-time lawmaker Rosie Berger in Sheridan County, political mailers circulated without attribution derided Berger’s votes for a fuels tax and funding for a revenue advisory committee. The flyers called the votes “non-conservative.”

During the last election cycle, wealthy donors supported candidates in Republican primaries who ranked highly on the Wyoming Liberty Index. That index, formerly associated with the Wyoming Liberty Group, ranked lawmakers along conservative principles that including voting against taxes. The index will be discontinued, the group’s director told the Casper Star-Tribune in October, though it remains online.

The Liberty Group’s founder, Susan Gore, has written opposing the tax.  

In past revenue committees, there have been members unwilling to consider any tax increases, Madden said. Not so this year, some committee members said.

“I think it’s too early to have a real good sense of where we’re going,” Connolly said. “But what I really am very appreciative of is it seems to me that the majority of the joint committee is willing to have a discussion about all the elements of our tax structure.”

Three committees to consider the problem

Connolly said she is hopeful that the structure leadership has created for the interim period between legislative sessions — with three committees considering the education funding crisis — will make for more consensus. In 2018 the legislative session is designed mainly for budget discussions. Last session clearly proved that any taxes will face a tough climb on the floor of the House and Senate. Any legislation that raises taxes must begin in the House. If it gets through there, it faces a Senate whose president Eli Bebout has said he does not think any tax increases are necessary before more cuts are made.

On top of that challenge, budget sessions only allow for 20 days of debate, and the Legislature will have to craft a two-year budget while also addressing education funding.

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By November, the Revenue Committee must have come up with its plans to hit the revenue goals laid out by leadership — $100 million, $200 million, $300 million. It will then join the Joint Education Committee, which has been looking for places to make cuts in the current education system, and the Select Education Finance and School Recalibration Committee.

Having three committees discuss how tax increases might fit into a solution that also included cuts or revenue diversions could create some consensus, Connolly said. More importantly, she said, it means more lawmakers will understand the bills being discussed and how they fit into a bigger picture, as opposed to just seeing tax increases standing on their own.


The vote count in the first paragraph has been corrected. -Ed.

Andrew Graham is reporting for WyoFile from Laramie. He covers state government, energy and the economy. Reach him at 443-848-8756 or at, follow him @AndrewGraham88

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  1. Hats off to the committee for having the courage to move the discussion forward. Interesting that those who suggest sales and property can solve the problem are exempt from paying at least portions of each. Speaking of sales tax, what about all the pages exemptions, are they still really justified?
    If a low tax rate is such a growth magnet where is the growth? The lack of an income tax and gross receipts tax hasn’t created a stampede of growth in Wyomin, ever.
    Smart business is as concerned with the stability of a state’s revenue system as they are with their specific tax bill. Wyoming can no longer provide the service it’s businesses and citizens demand, with the revenue system it has. Until that is remedied we will not see significant growth.
    One final question for the cut state government chorus, what state service that you benefit from are you willing to give up?

  2. A sales tax on ski tickets, float trips, and escorted wildlife tours, etc. should be considered. A tax primarily paid by tourists, who are still going to come to Wy. because we have the best experiences available. Young people deserve a sense of the common good and not the same, tired, zero sum arguments from the hard left and far right of the “not so great” generation.