Education funding is so critical to the future of Wyoming that we can’t, and shouldn’t, stop discussing it until we solve it. So here come two more people with ideas for the legislators who are toiling away on this issue.
Both are close observers of the debate with much to offer from experience in finance and in Wyoming’s tax system: Gail Symons and Larry Wolfe.
Gail is a ranch owner from Sheridan and retired U.S. Naval Officer specializing in logistics and finance, now retired from General Electric with experience in supply chain and marketing process improvement. She is a member of Wyoming’s Commission on Efficiencies in State Government.
Larry is a lawyer in Cheyenne, who has been deeply involved in Wyoming’s tax system since the late 1980s as a minerals industry lawyer. He was appointed by Governor Mead as a representative of the public on the Mineral Tax Task Force that submitted its report in 2016. Larry’s essay was originally his comment on the education “white paper” released in January that explored options before the 2017 session; he kindly permitted us to publish an updated version.
As Larry says at the end of his piece, legislators need courage, wisdom and concern for the future of the state to solve this problem. We all need to help with positive suggestions. The old question was why more money didn’t necessarily mean better outcomes. Now, the question is how less money can lead to better outcomes.
Take a look at these essays and see what you think. Post a comment in response. Maybe even offer to write a column for us on this topic yourself to move the conversation further.
-Pete Simpson
By Larry Wolfe
This is an open letter to Wyoming legislators, particularly those serving on committees dealing with revenue and with education needs and finances:
I appreciate that you are focusing on these critical issues. As you recognize, education operational funding is only one part of the challenge, the other financial issues facing the state are equally formidable, including school capital construction and major maintenance, State of Wyoming capital construction and investment (prison, state facilities, roads, technology upgrades etc.), local government and of course State general operational funding. Any one of these issues would be a sufficient challenge for the Legislature, you and your colleagues have to deal with all of them at the same time.
I would encourage you to approach the task of fixing these funding problems as a multi-year undertaking. Each future legislative session will need to take up the issue to find solutions to the many funding problems that face the state.
Please do not be persuaded that improvements in energy markets will save the State’s finances. It is not likely to happen, but if it does, it will just help diminish the pain and will not relieve your responsibilities to put Wyoming on a stronger and more sustainable financial footing.
To get into the details:
Regarding consolidation of school districts: it is probably not worth the effort, the politics (and the Fremont County legislators) will be against it and the savings are not large.
Regarding existing funding streams: you should look at redirecting the diversions now going to the Water Development Accounts and also consider taking some of the amounts in Water Development Account 3. It has over $46.7 million left according to the latest Fiscal Profile by the Legislative Service Office. While everyone wants to believe that the State will build dams and conveyance systems, the reality is that these projects are of marginal benefit to the State as a whole, they benefit only a small handful of citizens and the large ones are not likely to be built in the near future, if at all.
You should encourage the Legislature to adopt bonding schemes for major State capital construction projects. It was disappointing to see that approach turned down for the prison during the recent session. These projects build long term assets and it is only fair that the projects be paid for over time, rather than burdening solely the state’s current inhabitants. Bonding for these projects will free up cash to be used to pay for other things, such as education funding.
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We all recognize that Wyoming is highly dependent on mineral revenues (both taxes and royalties). Since that is the case the Legislature should be wary about imposing further tax costs on the mineral industry, because it exacerbates the State’s dependence and it will bring strong opposition from energy and mineral producers. It is important to remember that additional mills and raising the statewide sales tax both impose most of their additional costs on the minerals industry.
We all know what the real issues are in Wyoming’s tax system: Individuals, you and me, do not pay anything close to the cost of the services that the State provides. You should analyze and include in your list of potential revenue enhancements:
- Raise the assessment ratio for residential and commercial properties. It is currently 9.5% and it could be raised to 11.5% to match the industrial ratio, or at least set somewhere higher than the current ratio. This will provide funding directly to schools and also to local governments (counties, cities and towns) and special districts but it will not be borne primarily by the minerals industry. At a June 12 meeting of the Revenue Committee and Select Committee on School Finance Recalibration, the Legislative Service Office estimated additional revenue of $72.7 million per year from raising the residential and commercial assessment ratio to 10.5 percent and raising the industrial from 11.5 percent to 12.5 percent.
- Reimpose the grocery tax. This won’t be popular but it raises significant revenue ($28.8 million annually was the LSO’s estimate) and it does not burden the minerals industry.
- As recommended years ago in Tax Reform 2000 (a study available on the Department of Revenue’s website) — the Department of Revenue should study how Wyoming might impose a corporate income tax, including the mechanics and how much it would raise (given the Constitutional and statutory limitations). Ideally, legislators would have this information for the 2018 session. The problem with all the arguments about diversifying our economy is that we do not have a tax system that captures the benefits of a more diverse economy. We need to figure out a tax system that works fairly and efficiently to tax companies that do not extract minerals.
- Allow counties to enact an optional real estate transfer tax that could be set at a certain level that it would only apply to high value properties. This was also a Tax Reform 2000 recommendation.
- A sales tax on services will be controversial and there will be substantial opposition (including from lawyers) but if you are serious, that too should be the subject of a study you direct the direct the Department of Revenue to conduct soon.
- Repeal or aggressively sunset (and stick to sunsets) sales tax exemptions.
One final note. All the legislators serving in 2017 – 2018 are going to have to act as if it is the last term you will serve. It will take that kind of courage, wisdom and concern for the future of the State to withstand the pressures from the voters and interest groups.
Good luck.
Once again I remind those interested in resolving the funding crisis surrounding Wyoming public education that they take a fresh hard look at State Land management and the revenues from those so-called ” school trust lands”. When Wyoming was granted statehood and drew up it’s Constotution , it created state school trust lands, at least two square miles (sections) in every 36 square mile township statewide. Those lands were mandated to be managed by the State to provide the maximum reasonable return for education funding. In 1890 that meant paying to build one room schoolhouse all across the sparse state and finding the teachers to staff them. We also hand a land grant university, and still do. The only 4-year insttution and grad school in the Cowboy State is still technically an ag-based land grant schoolhouse.
But here’s my point: Wyoming presently has 4 million acres of State lands. Many ( too many ) are those lonely sections peppered across the landscape, surrounded and isolated by other private and public lands. But there are also vast tracts of contiguous State lands , some north of 50,000 acres in size . Many of these —- too many —- have been leased by the state to the same ranch or leaseholder for decades , on a noncompetitive basis for 10 or 20 years at a time , often excluding any other bidders or stakeholders . The standing leasee gets a right of refusal and easily retains a ” lock” on the land. Those state lands are too often managed as defacto private lands.
Is the State getting the maximum market value return on those leases to put towards education ? You tell me. I don’t believe we are in too many cases. I believe the State Land Office lowballs too many leases and makes it hard for others to offer more money , even if they could acquirer the lease. My anecdotal evidence and more than a little firsthand observation tells me certain leaseholders ( read: cattle barons and / or hobby ranchers and their tax lawyers ) are getting some real sweetheart deals. But how would we know ?
I would like to see a very thorough wholly-transparent border to border accounting of the management of State lands across Wyoming and the revenue they generate for schools . Or don’t.
Who will provide us that State Land audit ?
It’s rather obvious that Larry is a lawyer and lobbyist for the minerals industry — which consists, almost entirely, of out-of-state corporations that do not care about the people of our state. Above, he proposes taxes on everyone BUT his clients, including regressive taxes that the poor and the young can least afford. As such, we simply cannot trust him to advocate anything that is in our interests.
What Wyoming DOES need to do is swap its regressive sales tax for an income tax, which will cause big, fat corporations such as the ones he represents to pay their fair share. See
http://www.brettglass.com/taxswap.html
I completely agree with Larry Wolfe that we must look at water development. Having served on the Water Development Commission for eight years in the past, I am convinced that we will not be building any large dams in Wyoming any time soon. We’ve poured money into water projects for many years and now we need to cut that back while we meet the crisis in educational funding.
I can’t support the reinstatement of the regressive grocery tax and am fearful of raising property taxes for my fellow citizens in Teton County. They are already so high here because of our land values that it would force many of our citizens out, especially a lot of the old timers who give the place its character. I do think we need to look at corporate taxes and even address the thorny issue of taxes on services. It is crazy that we are working so hard to diversify our economy, but the diversification produces no state revenues with our current structures.
Some good ideas, but really there is no defense for a grocery tax. The grocery tax is a regressive tax in which a lower income results in a the greater percentage of your income going to pay grocery taxes. Wyomingites already pay more for groceries than the average of other states. Of course, everyone in the northern/southern tier of Wyoming has the option to go up to Montana/Colorado to get groceries with no sales tax, so too bad for the businesses in Wyoming who have to compete if Wyoming reinstates the grocery tax. A grocery tax is a bad idea that hurts the most vulnerable people and hurts business. Maybe a better idea would be to increase the tax on liquor, beer and wine to match surrounding states because that does not affect people unfairly, especially children who are hurt by a grocery tax, and it actually puts Wyoming businesses on an level competitive field. Wyoming has the lowest taxes on alcohol in the entire USA.