A house in Kemmerer seen in 2018. (Angus M. Thuermer, Jr./WyoFile)

My neighbor Nick and I got to talking the other night about Wyoming’s budget problems. With COVID-19 and the coal industry’s collapse, the governor said the state might start abandoning small towns because we can’t afford to maintain their sewers and streets.

Sundance is considering axing its entire police force because the town struggles to pay for it.

Nick and I went back and forth about spending, revenue and Wyoming’s dependence on the mining industries. Then he looked at me and said flatly: “It’s stupid that we don’t pay state income tax here.” 

I was shocked. Nick is a Trump-loving combat veteran; he had come over, in fact, to show me his Trump 2020 stiletto pocket knife. But he’s also from North Carolina, where even conservatives understand that public services like police and roads aren’t free. 

It’s only in Wyoming that people seem to believe these things just fall from the sky. 

The Wyoming Legislature passed its first severance tax on mining in 1969. Ever since, our tax system has leaned more and more heavily on coal, oil and gas companies to pay the bills. As a result, entire generations have come of age in Wyoming with no experience paying state taxes like the rest of our fellow Americans.  

Along with having no personal or corporate state income tax, Wyoming also has the third lowest property tax rate in the nation and the sixth lowest sales tax rate. All of this is nice, and it’s been made possible by mining companies covering Wyoming’s costs. 

In one of his last interviews, former Wyoming Gov. Stan Hathaway told journalist Sam Western: “I passed the first severance tax. I got the Permanent Mineral Trust Fund. And they’ve carried Wyoming’s expenses very well. But it bothers me that we’ve created something that the majority of people in Wyoming said, ‘My god, this is a free ride.’” 

Hathaway did not intend to give Wyomingites a free ride, however. “The truth is,” he said, “we all should pay our share of government costs.” 

Instead, Wyoming passed the severance tax out of desperation.

Only $80 left

In the late 1960s, Wyoming’s economy depended on another industry — agriculture — that was rapidly declining. When Hathaway checked the balance in the state’s general fund and found there was only $80, he knew he had to act before the state went flat broke.

Wyoming legislators at the time, like future Gov. Ed Herschler and future U.S. Sen. Alan Simpson, initially opposed the governor’s severance tax proposal. But when Hathaway challenged them to figure out an alternative, they admitted they couldn’t, and they passed the tax.

All this might sound familiar today. 

From 20 stories up, Naughton Plant Manager Rodger Holt explains in 2018 how 225,000 tons of coal will be shuttled into the power plant near Kemmerer. (Angus M. Thuermer, Jr./WyoFile)

Wyoming currently has more than $80 in the bank. In fact, our “Rainy Day Fund” is among the richest in the nation, with roughly $1.7 billion. But the state is projecting a shortfall of $1.5 billion in revenue over the next biennium.

Coal isn’t coming back, gas is in decline, oil continues to struggle and we’re looking to be flat broke — again.

There are also a couple key differences between now and yesteryear that make our situation more difficult.

First, there does not appear to be a single revenue generator like Hathaway’s severance tax that can replace our disappearing fossil fuel revenues. Taxing wind won’t do it, and neither will taxing tourism. We are going to need a variety of revenue sources to make up for what we’re losing, including — gasp — taxing ourselves.

Second, there are scant few state lawmakers like Hathaway, Herschler and Simpson today who are willing to accept tough solutions to Wyoming’s budget problems. When a Republican legislator proposed a corporate income tax last year — Wyoming is one of two states in the nation with no mechanism to tax corporate profits — it wasn’t even brought up for debate.

Politicians here tend to talk about cutting spending instead of replacing lost revenues, but few offer actual solutions.

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It’s hard to blame them — after all, Wyoming is filled with people who have either lived their whole lives here never having to pay state taxes, or who came here specifically because they saw a big neon sign that said “free ride.” 

But, of course, the ride was never really free, and the mining companies that have carried the state for 50 years are now asking for their own tax breaks.

Wyoming, like everywhere else, needs schools, roads, hospitals, firefighters, and other basic public services. And like Nick said, believing we can have these things without paying taxes is just stupid.

Nate Martin

Nate Martin is the director of Better Wyoming. He lives in Laramie.

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  1. It is always amusing to read people’s letters bleating for a state income tax.
    41 states have an income tax and all but two or three states, are in the red,
    including our neighbors to the north and south.
    Connecticut was the last state to enact an income tax to balance their budget,
    and they have been in the red ever since.
    For 50 years, Wyoming has had a stream of revenue from severance taxes and if our governors and legislators had shown fiscal restraint and discipline, we would be sitting on a mountain of capital in savings with interest.
    But instead the legislators went the drunken sailor route and expanded the state government far
    beyond what was necessary, added new departments, hired too many school administrators,
    built Taj Mahals, called schools at 300 to 400 dollars per square foot, which we couldn’t afford
    to maintain after construction.
    I don’t think the working people of Wyoming should pay for their mistakes, and desire for power.
    Writers talk about the people paying their fair share, but never put a dollar amount on it.
    I have paid my fair share to Wyoming and here’s how I did it.
    My wife and I decided to private school our children, which can be done very economically and affordable. By doing that, we saved the State of Wyoming over 700,000 dollars, by not using
    the state schools. The tax advocates have a long way to go to catch up with me.
    A few months ago, I discovered that Wyoming has over 5,000 non profits in the state.
    Non-profits exist on “unearned income” or donations. Instead of taxing the “earned income”
    of the working people, let’s start taxing the “unearned income” of non-profits.
    Wyoming could just take about 10% of what’s in their bank accounts for starters and see how far that goes. There are some pretty wealthy non-profits in Wyoming.
    You do understand that there is no such thing as a “Non Profit” entity in reality.
    They are simply non taxable entities, but non-profit sounds so much more politically correct and socially acceptable.

    1. Good points all Tom. The education system possibly being the worst example, I can opine at great length concerning the tremendous profligate spending and waste in our state government. We need only look at the UW budget to get a clear view of the fiscal ailments of the state of Wyoming. As a former UW employee, the tremendous waste on campus is hidden only from the lazily blind citizenry who find some measure of their identity in the university. In reading this letter about our “stupidity” for being free of state income tax, I’m reminded of a plaque I used to see displayed at the entrance to the gallery at the state house (long since removed). This plaque was a statement of purpose made and posted back around 1906 as I recall. The statement simply iterated the fact that Wyoming residents would never have to pay property tax due to the vast treasure of resources that existed across this great state and the wealth that could be derived therefrom. So, I completely agree with you that the un-repentant largess of our elected officials, over several decades of the last century and this one, have effectively deprived us of the great freedom and wealth that is ours as citizens of the great state of Wyoming. The citizens of Wyoming should stand steadfast against all efforts to implement a state income tax and instead demand efficiency and fiscal restraint, as well as a “nest egg” mentality to secure that wealth that, as the missing plaque once showed us, was ours. Beware, a state income tax will be progressive, incremental, fraught with fraud and to be sure, withheld in small but ever increasing amounts (withholding tax) so as to hide the impact on the tax payer and be permissive to state leaders for more and greater misuse and abuse that ALWAYS follows such terrible encroachments.

  2. 20 year resident. I feel smaller government is a better solution. Plenty of fat to be cut there. Legalize marijuana and tax it and quit spending money prosecuting and imprisoning weed related offenses. Insist that new land developers foot the bill for their water and sewer expansion.
    Ex: The state could save a lot by cancelling all landscaping maintenance. If you want your schools to have nice lawns and grass and trees then let the community volunteers step up. You can NOT tax your state into prosperity!
    Ex: Do away with lifetime benefits for state office holders….it’s just a job like any other and the benefits should end when you stop doing the job.
    NO STATE INCOME TAX!

  3. The buried lede seems to me to be that corporations aren’t paying their fair share, either. They never have, and if anyone has gotten used to the easy life in Wyoming, it’s big companies (mineral and otherwise). Taxes for corporations are ridiculously low here in an attempt to court more business–but sike, it hasn’t always worked, because we don’t have most of the things new businesses need: a trained and educated workforce, infrastructure, and a socially welcoming environment.

    But now that people are fleeing big cities because of COVID, it’s really our chance to court new business. Not with low taxes, but with the thing we have in SPADES: cheap land. Yes, come here and build your server farm! Legalize weed and we would see a massive influx of young entrepreneurs opening indoor growing operations. Unfortunately, our state looks down on these so-called “liberal” things—like high tech, like weed, like actual substantial business tax.

    Oh well. Luckily we’re a part of a union and the federal government will continue to subsidize our bleeding economy.

  4. I am a life long resident of this state. The fact we have lost income from oil and gas has reduced the states surplus money paid by mines and the oil industry, that is no secret. There are those who are still struggling to make it because of it. And with Covid and the job lose, business’s are forced to close. And to suggest that other states have a state tax we should do the same here is absurd . I’m sure most of those who are still struggling to make ends meet might tell you where to go. I personally have issue with those who move to Wyoming and try to change our way of life to suite there’s, that being said there are those who move here from else where because of the lack of a state tax. In good or bad times Wyoming has prevailed without taking more money form its people. Before making such a change I challenge you to take a pole (state wide) from people on both sides of the isle, I think you will be surprised to see people like the State the way it is.

    1. you’re right. i’m a life long wyoming resident and i enjoy the State as it is. However, today is not an indication of how the State will fare years from now.

      As the author stated, “Coal isn’t coming back, gas is in decline, oil continues to struggle and we’re looking to be flat broke — again.”

      those of us who are wanting our State to be a bit proactive in preparation of the coming years are open to the idea of some sort of a state wide tax. otherwise, schools, counties, municipalities, law enforcement, and infrastructure will all suffer more than they already have.

      change is necessary. to fear it is foolish.

      cheers

    2. The solution shouldn’t be to tax citizens already struggling to make ends meet. As the article mentions, a legislator ATTEMPTED to bring up corporate taxation, but it wasn’t even brought to the floor. Why? Because our legislators are bought and paid for by corporations who love having a free ride.

      It isn’t the citizens getting everything for free, it’s the corporations profiting off us and our state. We pay property taxes and sales taxes already, but you know who doesn’t? The big boys raking in the dough on our land and our resources.

    3. Mr. Langenderfer’s comment entirely misses the point. Keeping “the State the way it is” is NOT one of the options. At least not as long as out-of-state purchasers of Wyoming coal are unwilling to keep our good times rolling. The gravy train we have all come to enjoy is now running on a reduced schedule and nobody’s asking our permission to discontinue service.

      Either we drastically CHANGE “the State the way it is” by cutting and eliminating public services (roads, schools, police, water & sewer, health care, …) or we figure out a NEW way to pay for it all. “There ain’t no free lunch” is coming to good old “the way it is” Wyoming, and digging in our heels for old times just means we’ll go hungry (and our children will all move away in search of a decent meal).

    4. Of course people “like it the way it is”: it’s a free ride and they are spoiled. If people truly understood what a good deal most things are that taxes fund (compared to buying the goods and services at private, market rates) they’d be lined up overnight camping on the sidewalk like they do for a going-out-of-business sale at Best Buy! In Sam Western’s great book on the business and politics of Wyoming, he describes our state as an “energy colony” as opposed to a representative democracy (most of us believe it should be the latter). The people of the state lack a voice in too many situations because only the money (in this case, the extractive mineral industry) is listened to. Most western states are welfare recipients when it comes to payouts from the Feds. We live steeped in myth that we are rugged and independent and pull ourselves up by our boot straps. This state couldn’t even afford boots if it wasn’t for the Feds! Progressive taxation is what democracies are founded on and it is the only responsible thing for this state to do moving forward. Of course, that doesn’t mean we’ll do it…

  5. To all of you moving from other states and to the author, don’t come here and try to change our state to fit the high tax states you came from. We like our state the way it is, that’s why we have lived her our whole lives!!! If you dont like the way we do things here, go back to where you came from! We don’t welcome your high tax views here!! Sincerely, most of Wyoming.

    1. Hi Johnna, Nate Martin here, the author. I was born and raised in Rock Springs and live in Laramie. Thanks for reading.

  6. Disagree. No income tax is and can be an incentive for investment and growth INTO wyoming. (Uber wealthy won’t stay or buy into Wy. past a casual ski trip, accounting math will show numbers look better without ‘another’ taxation scheme) Technology and new social dynamics will allow business and human migration to gravitate to paths of least (taxation) resistance. Perhaps politicians and the give me more stuff citizenry should push away from the feeding trough dinner table of taxes a little sooner, lest they become just another gluttunous tax and spend, and tax and spend some more beast that will never be satisfied. Yes I also witness attest that from another no income tax state as well, take heed friends.

    1. If that were true Wyoming would have been leading the nation. You lost vegan ideas carry no water…

  7. I’m sure state income tax is a necessary evil but our Government needs to be drastically cut and get it under control. We have new schools scattered all over the state that are so under used that some need to close off portions that aren’t being used. Buffalo has 3 elementary schools all in a 2 block area and were poorly designed and are way under populated. We’re building a huge state facility in Casper and half the buildings in Cheyenne are under used. Also this will take a huge amount of income from private landlords who pay taxes on the income from rents. This will hurt private sector’s economic outlook.. I won’t even mention that black money hole in Laramie.
    Please encourage a tighter government spending outlook.

    1. Yes, surely Wyoming will see immense economic success down the road powered entirely by a bunch of grumpy retirees moving here to avoid taxes and people of color!

      1. Whoops. Apparently I replied to the wrong comment. This was meant as a response to Eric Eltinge further down.

  8. Although I can not disagree with the need to find a better options for balancing the states budget, insulting the states entire population is not the answer.. ‘It’s only in Wyoming that people seem to believe these things just fall from the sky.’ There are 8 more states besides Wyoming which do not have state income tax. This statement is highly disrespectful and improper for someone who is supposed to be for the improvement of Wyoming. I honestly did not care what you had to say past this line. I just hope you find a state where you are happier to live and feel they deserve your respect.

  9. Nate, I’ve been saying this for a couple of years. How does “freeloader” fit in with our vaunted “Cowboy Ethics”?

    I’ve heard lots of conservatives proclaim that they love Wyoming just the way it is. Well, news flash: if we don’t fund our communities and schools, Wyoming won’t stay “the way it is” for much longer. What will things look like when our population is $200,000?

    The legislators have an obligation and responsibility to establish a sustainable revenue stream to maintain the communities we love.

  10. As a life long Califorian who is retiring in Sheridan, I would caution against raising taxes, permits, fees, etc. Democrats have never seen a tax or regulation they didn’t like, nor repealed one passed. With global warming, COVID, race riots, etc., white flight is headed north. Friends that left CA for NV and AZ are relocating to UT, ID, and WY. What happeded to Bozeman in the 1990s is happening to Boise, Ogden, and WY. Tech millennials and wealthy baby boomers are coming your way. Stay uber libertarian and 2nd amendment safe.

    1. We don’t want to be a white flight destination. We want to diversify our people, industries, and mind sets. If changing a few things (like our tax code) can improve the lives of people already here, then I welcome the change.

  11. I had the honor to work for Governor Hathaway both on the campaign and after election. Those were heady days and tense times, but government worked.

    I’m frankly flabbergasted by today’s state of affairs and while I no longer live there, family is facing loss on a massive scale in the middle of a pandemic. I fear the worst for my family without leadership willing to sacrifice itself for the long-term good of the state. If the people don’t get behind their leadership to insist on fiscal solvency, then leaders won’t either. How bad does all this have to get?

    I am also totally nonplussed by all the news pictures I see of city councils and the general public without masks and not socially distancing. I have to ask: what do you think will happen? Will someone call you weak or a pansy? You won’t die if they do, but many might if the person calling you that is not wearing a mask. When did macho replace common sense??? And why.

    Great article. Thank you.

    1. Hey Mary! Ernest had a great deal to do with that minerals tax, lost his business support here in Wyo behind that. Trisha

  12. Interesting the concept of budget cuts – deep budget cuts – to bloated state government agencies – specifically Education – recieved scant attention in the article. Taxes are 1/2 of the revenue shortfall issue. Expenses, the other 1/2, are just as important. Hathaway had political courage to raise taxes in the ‘60’s. Please find the legislators with the stones to make impactful expense cuts before raising anyone’s taxes.
    Fact: a state income tax on personal income, increases in real estate taxes, etc. would not begin to address the shortfall issue.
    Fact: Wyoming increased spending in the ‘90’s and ‘00’s as if revenues would always increase. Not so, as we now see.
    5th generation Wyoming resident.

  13. YES, I agree that we all need to pay our fair share of taxes to support the services that we count on (and often take for granted). Smart people can design an income tax system that spares the most vulnerable, and is fair for the rest of us (including corporations). The health and viability of valued communities depend on all of us to pitch in. It would be tragic and stupid to wait until we are desperately broke to make a change. Thanks to Better Wyoming for keeping this in front of our State Legislators.

  14. As a new Wyoming resident, coming from a state with a 3.07% income tax, we didn’t move here for the tax break. If Wyoming is to attract and diversify our industries and subsequently welcome more residents, people will be coming from states where taxes are a part of life. Implementing a tax would ease the burden of funding public services, like first responders, roads and infrastructure. It only makes sense.

    1. I agree. We could impose a very modest tax that would still be less than most states and would solve a lot of our fiscal problems. I personally am happy to support our state by paying a bit more in taxes each year. Folks seem to forget that taxes fund investments in infrastructure, education, and the like that can provide a good return. I say lets pay more taxes, while being careful how that new money is being spent.