Lawmakers are doing the old dodge-and-cut revenue dance

If the Wyoming Legislature’s pre-session activity is any indication, members have set an extremely low bar for what they expect to accomplish in 2021.

In its infinite wisdom, the Management Council has decided to hold two ceremonies on Jan. 12 to swear in lawmakers: one for those who will wear masks in an effort to prevent the spread of COVID-19, and another for members who apparently think face coverings and social distancing are for socialists.

“Let’s not dictate to [members] how they should be there,” said incoming Senate President Dan Dockstader (R-Afton). Spoken like a true leader. Why should lawmakers have to follow Laramie County public health orders, like the rest of us in the capital city?

At least the council thinks the coronavirus pandemic poses enough of a risk to delay the start of the two-month session until sometime in spring. But what does it plan to do then? Is tax reform anywhere on its agenda?

State government is facing an unprecedented budget crisis, with $515 million in cuts to state agencies proposed by Gov. Mark Gordon and a $300 million deficit in school funding. Yet most members on the Joint Revenue Committee — which is supposed to advance bills to help replenish the state’s coffers and avert a disaster — have responded by burying their heads in the sand.

I could have used another euphemism popular with observers of the Legislature, who note session after session that lawmakers avoid making tough decisions by just “kicking the can down the road.” But that isn’t accurate.

No, the committee booted that empty can clear off the side of the road as far as it could, over a ditch and into a muddy field, where tax-averse members hope it gets buried in the muck until it’s forgotten by the public. In the meantime, if all goes according to their plan, fossil fuels will rise again to save Wyoming’s economy and COVID-19 will magically disappear. 

At its Nov. 19-20 meeting, the Joint Revenue Committee rejected its best chance to raise some desperately needed cash for state government by voting 8-6 against establishing an income tax to be paid by Wyoming’s wealthiest residents and corporations.

State income taxes are the most despised form of taxation to the Wyoming Republican Party, which has forbidden legislators who want to remain in good standing from making eye contact with anyone broaching the topic. 

But three Republicans — Revenue Co-chairmen Sen. Cale Case of Lander and Rep. Dan Zwonitzer of Cheyenne, plus Rep. Pat Sweeney of Casper — bucked their state party’s central committee and voted to sponsor a personal income tax bill for residents making at least $200,000 a year.

Because of sales and property tax credits mandated by the Wyoming Constitution, though, the bill wouldn’t have required anyone to pay a dime in state income tax if they earned less than a half-million dollars a year. Because of that, the bulk of income tax collections — an estimated $107 million annually — would be raised by taxing residents who make more than $1 million annually.

Of the roughly 280,000 residents who file a federal income tax return, about 880 hit that mark, Revenue Department Director Dan Noble said. So, Joe Sixpack doesn’t have to worry about the state of Wyoming coming after his hard-earned beer money.

In fact, Joe isn’t even going to have to pay more than 2 cents per gallon of beer — the same liquor tax rate since lawmakers passed it in 1935. The Revenue Committee nixed a proposal to (gulp) double it, even though House Minority Leader Cathy Connolly (D-Laramie) pointed out that based on the rate of inflation, that tax should be raised by 37 cents a gallon.

After five terms, Connolly said she was ready to retire, but watching her colleagues refuse to face the state’s dire fiscal reality convinced her to run again. She was unopposed in the general election. 

Many lawmakers have long recognized that the state’s economy is changing, Connolly said, but thought they had five to 10 years to consider what to do next. She determined “our reliance on the extractive industries could no longer take place, as we needed to address it immediately.

“There are solutions out there; I’ve been looking at them for years,” said the legislator, who has sponsored several income tax bills that have been soundly defeated or not even considered.

If Gordon’s tax cuts package is approved, it will do irreparable harm to many, including seniors, the poor, disabled residents and children, Connolly said. A proposed $135 million per year reduction to the Department of Health means deep cuts in programs that provide services to mentally ill residents, substance abuse treatment and suicide prevention.

“Our communities are not going to thrive,” she said. “We have already seen … what the cuts from three to four years ago look like. We’re not going to be the same state that we are today.”

Zwonitzer, who will chair the House Corporations, Elections and Political Subdivisions Committee next year, said the income tax bill could probably be “tweaked” to raise up to $200 million per year. “[That] gets us a pretty strong way to close the [budget] gap and ride the dip until, in my mind, oil will come back at some reasonable level,” he said.

What the Legislature cannot afford to do, Zwonitzer stressed, is sit back and do nothing and allow the state to “get past the point of no return.”

Yet the committee said no to raising alcohol taxes, passing a small real estate transfer tax and changing the tax classification for certain agricultural property. It couldn’t even muster the courage to remove sales tax exemptions on manufacturing and data centers.

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The committee will decide later this month if it wants to sponsor a tobacco tax increase. Meanwhile, the only tax bill it advanced would hike the state’s tax on gas and diesel by 9 cents per gallon. That would raise about $40 million per year for Interstate 80, and $20 million for local roads. It’s a start, but won’t fill the $135 million annual deficit estimated by the Wyoming Department of Transportation.

Legislators who remember the heat they took from voters for passing a dime-per-gallon fuel tax increase in 2013 are likely cowering in their cowboy boots.

Rep. Tim Hallinan (R-Gillette) explained his opposition to any income tax bill at the Revenue Committee’s meeting. He thinks Gordon’s final round of $115 million in budget cuts is too steep, but somehow is confident the state can live with the other $400 million in reductions.

“I think we need to cut education also, and there are ways to do it that are in keeping with the Constitution and would not impair the classroom teaching,” Hallinan said.

I don’t believe that evidence-free assertion for a second. School districts throughout the state have universally told the Select Committee on School Finance Recalibration that a proposed 16% budget cut for next year will lead to major layoffs of teachers and staff and make it virtually impossible to provide a quality, equitable education to every Wyoming student.

Phyllis Roseberry, who lives near Worland, told lawmakers exactly what they needed to hear. She spoke on behalf of herself, her family and neighbors who are willing to pay more in taxes if it benefits the state’s youth.

“If we value our children we will have to look for more sustainable revenue sources,” she said. “To drastically cut our school budgets will absolutely cripple our ability to build the skills of our children and the state to compete in the future economy. We will become a backwater, poor state that offers no hope for its people.”

We deserve far more from our citizen Legislature than we’ve been getting, beginning with meaningful tax reform. If cutting state agency and higher education budgets by a half-billion dollars and gutting our public school system is something we’re ever willing to accept without a fight, Wyoming has truly lost its way.