Senate Revenue Committee Chairman Ray Peterson (R-Cowley) speaks at a rally for a tobacco tax during the 2018 Legislative Session. (Andrew Graham/WyoFile)

Sen. Ray Peterson (R-Cowley) lost his reelection bid last week, halting a 13-year Senate career and ensuring the Legislature’s Joint Revenue Committee will see new leadership at a critical point in the state’s reluctant consideration of its tax structure.

Peterson, along with Rep. Mike Madden (R-Buffalo), who is retiring at the end of this term, guided the Joint Revenue Committee through nearly two years of contentious discussions about Wyoming’s unbalanced tax structure. Their departure means a lawmaker from each body will have to step into arguably the least politically desirable committee leadership roles in the Wyoming Legislature.

At a June 2017 revenue committee meeting, Peterson, who also served on the Select School Finance Recalibration Committee that examined education funding including teacher salaries, joked about his reelection prospects. “I’m Senator Peterson and I’m the one raising your taxes and cutting your wages,” he said. “Vote for me.”

The quip proved prescient.

Ultimately, it was Peterson’s positions on public education that killed his reelection prospects. Most notably, Peterson shouldered a Senate bill that at one point threatened to reduce funding for K-12 schools by $114 million.

Citing that bill and other votes, the Wyoming Education Association, the state’s teachers and school administrator’s union, canvassed on behalf of Peterson’s primary opponent — former educator and school administrator RJ Kost. The challenger defeated Peterson by 325 votes — 2,246 votes to 1,921.

The coup is a notable victory for the union. In toppling a perceived opponent the WEA flexed its political muscles and perhaps sent a message to other lawmakers as the Legislature continues to search for a solution to education costs. 

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

“Wyoming voters are in support of funding public education,” WEA President Kathy Vetter wrote in an email to WyoFile on Monday. She cited two polls, one the WEA funded last summer and another from the gubernatorial primary election done by the University of Wyoming’s polling branch.

“WEA will continue to support candidates who create an equitable and adequate public education system for statewide student success,” Vetter said.

“When we look at the opportunities Senator Peterson had to truly stand up for education, he voted against public education interests,” Vetter wrote.

The group pointed to Peterson’s votes on on four bills as evidence of his willingness to “support huge decreases in education funding,” the most significant being the funding cut bill and two constitutional amendments. One amendment, brought by Sen. Charles Scott (R-Casper) sought to change the funding model for school construction. Another, brought by Sen. Affie Ellis (R-Cheyenne), asked voters to change Wyoming’s Constitution to limit judicial oversight of education funding thus giving the Legislature more power over education funding. Peterson voted for both.

“WEA members opted to support Senator-elect RJ Kost, an educator who truly understands the impact the decisions made in Cheyenne have on public education,” Vetter said. No Democratic candidate appeared on the primary ballot.

Peterson was misunderstood by the WEA and other education advocates, he argued. He and Sen. Dave Kinskey (R-Sheridan) came up with several bills, including Senate File 117, which included the $114 million in cuts, he said. The bill had been informed by the Legislature’s school finance recalibration process, in which lawmakers hired outside consultants to review the state’s funding model.

“We listened to the consultants and took what we thought were accurate ideas and concepts and put them in a bill,” Peterson said. The bill was later amended by Peterson and the level of cuts were reduced to $72 million. He argued he was using his experience to “take that bill and use that to accomplish fixing the fact that the funding formula is flawed in favor of larger schools over our smaller schools,” he said.

But just one year after a $77 million cut, proponents of maintaining the education funding model fought back against what they saw as a series of cuts from lawmakers that weren’t being paired with long-term solutions for education. Ultimately, Peterson’s bill was killed by the House Education Committee but some of its measures made their way into a House and Senate’s compromise which cut education funding by $27 million.

Peterson said he did what he could for teacher’s raises and that even with the final cuts teacher pay in his district improved since the last session. But Peterson had made a variety of public comments that turned educators against him, to the point where he said two school districts even cut business with his office-supply company.

“That’s the tough part to swallow is I don’t think I did my job explaining it and I feel bad for the constituents because they’ve lost a seat that’s got 13 years of experience,” Peterson said.

In the Wyoming Legislature, Republicans in both chambers take to a caucus when they want to discuss a statute behind closed doors and away from the microphones and recording devices on the chamber floors. In one such meeting, called by Senate President Eli Bebout (R-Riverton), Peterson claimed he suggested amending Senate File 117 to include a raise for teachers. Teacher salary increases had been suggested by the education consultants as a necessary pairing to any cuts lawmakers made.

“I was the lone vote to support the amendment,” Peterson said. “Wyoming Education Association doesn’t know that, and the state of Wyoming doesn’t know that, but here’s the one senator trying to raise teacher salaries.”

Bebout did not respond to a voicemail left on Monday.

“If his Senate File 117 had passed with that $114 million cut it would have been an extremely large pay cut for teachers,” Vetter said. “So what he said behind closed doors and what he proposed on the floor seemed to be in conflict.”

A steady but reluctant voice for tax reform

Though the education debate felled Peterson, his time on the revenue committee didn’t make him too many friends either. The committee, and particularly its leaders, faced criticism from conservatives and industry lobbyists as being “tax hikers” even for barely squeaking out a few modest tax proposals that died without introduction in the Wyoming House during the 2018 Legislative session.

“People think I was maybe a tax-and-spend kind of guy and nothing could be further from the truth,” Peterson said. The senator said that looking back over his career in the senate, it was his conservative approach to budgeting that he was most proud of. He strove “to kind of be really conscientious of the taxpayer dollars and that government is efficient and that we’re using the money wisely and provided the services that are needed,” he said. “That’s the job of a state legislator.”

Madden faced sharper criticism. The longtime House member saw anonymous ads taken out toward the end of the 2017 Legislative session in his hometown newspaper, the Buffalo Bulletin, calling him the “Cowboy State’s Most Prolific Tax Hiker.”

Though not as dogged a reform proponent as his gruff House counterpart, Peterson was willing to look at the imbalance in Wyoming’s tax structure honestly. He frequently reminded his colleagues of the overarching concern beneath today’s budget crisis — the fact that 70 percent of the state’s revenue comes from the volatile mineral industry.

“My position on that committee was basically trying to get the public educated,” he said Monday.   

The Joint Revenue Committee meets at Central Wyoming College in Riverton in June 2018. The committee commissioned an economic study that concluded under Wyoming’s current tax structure, efforts to diversify Wyoming’s economy won’t only fail to fix the state’s fiscal woes, but will instead worsen them. (Andrew Graham/WyoFile)

Last November, Peterson challenged then-Wyoming GOP secretary Charles Curley at a committee meeting when the party official came to deliver a “no new taxes” ultimatum.

When Curley told lawmakers to drop the tax talk, Peterson asked the party secretary if party officials had taken a clear-eyed look at the problem.

“When is Wyoming going to address that 70-30 percent ratio on revenue streams,” he asked Curley, “that boom-and-bust cycle we continually go through, and when are we going to get serious about that problem?”

Still, at almost every meeting of the Revenue Committee last year, Peterson would find a moment to remark on the unpopularity of the committee’s tasks. He asked committee members to “hold their breath and vote aye” so that the committee could complete the task assigned to them by legislative leadership — bringing tax increase bills before a Legislature drowning in a revenue deficit.

Though the committee considered such unpopular reforms as property and sales tax increases, it ultimately backed down from sending those larger revenue generators on to the full Legislature last year, moving instead much smaller bills on lodging and alcohol and tobacco taxes. Those measures then died when Speaker of the House Steve Harshman (R-Casper) declined to introduce them to that chamber for a vote.

Peterson was disappointed by that result, he told WyoFile.

Even the WEA applauded Peterson’s work on the Revenue Committee.

“Peterson entertained open minded options to increasing revenue to make up the shortfalls currently faced by the state,” Vetter wrote. “Although the committee was unable to come up with stable revenue increases to support the current shortfalls, Chairman Peterson was willing to ask difficult questions to guide the committee in a positive direction.”

Efforts by Peterson and the Revenue Committee to draw public attention to Wyoming’s tax imbalances progressed this summer, with the publication of a headline-grabbing study on how economic diversification would hurt, not help, Wyoming’s coffers without tax change.

The ENDOW committee, Gov. Matt Mead’s signature economic diversification effort, released its final recommendations recently and included sharp language about tax reform. “For a citizenry that prides itself on the independent cowboy spirit,” the report read, “citizens and non-mineral businesses are not paying their fair share (i.e., the mineral industry is effectively subsidizing everyone else in the state).”

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The committee did not propose any specific tax changes and has faced criticism for only looking at one half of the question. But the latest report called on lawmakers to look for some kind of a fix.

“We understand that tax policy is complicated, and change will be difficult and unpopular,” the report read. “But it is imperative that our elected officials revise Wyoming’s tax code.”

Candidates in the most prominent political fight of the year, the contentious Republican gubernatorial primary, stayed well away from serious discussion of changing the tax structure.

The Senate has lost leaders of at least three key committees since the last session ended. Senate Appropriations Committee Chairman Bruce Burns (R-Sheridan) is retiring at the end of his term, while Senate Judiciary Committee Chairman Leland Christensen (R-Alta) stepped down from his chairmanship to pursue an unsuccessful run for the Wyoming State Treasurer’s Office.

Andrew Graham

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

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  1. Kathy Vetter mentioned the bills I supported this last session that were not friendly to education. The first was the reduction bill that I sponsored and reduced to 40 million. It was never on the floor at 140 million. I made reductions to that bill at introduction and continued to make reductions and changes to that bill until I was satisfied that it accomplished what I had intended. And really, 40 million compared to what we ended up at with 27 million, out of a 1.5 billion dollar budget! Get real. A 2% reduction! Get ready Ms. Vetter becuase I’m sure bigger cuts and reductions will surely follow. Who will you go after next for those reductions? The other two bills I supported were to address the shortfall in the school budget amounts. The choice was quite clear. Either we find additional revenue to build schools or we make serious reductions to building schools. What is your solution Ms. Vetter? Take more money from Health. How about local government? The last bill that offended schools was the Ellis bill that proposed limiting the power of our Supreme Court to directly influence the amount we allocate to our schools. Remember that it was our consultants that expressed their concerns of how specific and regimented our courts decision was and how prescriptive it was in forcing our legislative hand and leaving us with very few options. Perhaps the legislature will reduce all budgets 10%’ including the Supreme Courts, to give to education. I think that would drive the point home to our justices. I’ve never been a fan of legislating from the bench but that is what we have with this situation. My vote was right on point with all three bills. If the public were educated on these issues, they would have agreed completely. Ms. Vetter, what are your solutions to the shortfall? How would you vote? When our surplus is gone, then what? I’m sure you agree with all of our increases to the education funding over the years. But not one reduction bill when revenues are down. For all legislators, remember this when increases are being proposed to education, because they will be permanent increases. Thus the word unsustainable comes into play. But it seems our schools are not team players. Forget everyone else. Education is our priority above all else. Sorry to our mental patients, sorry to our senior citizens, sorry to our health care, sorry to our court systems sorry to our highways and sorry to our law enforcement. Sorry to our counties, towns and cities, it seems you don’t matter as much as education. Watch out for your budgets, the legislature, it seems has no choice but to rob you and continue to give to our poor schools. 240% increase just is not enough I guess.

  2. Total reductions to education was 30 million the year before and those reductions were plugged into the flawed funding formula. This last budget session we reduced the education budget by another 27 million, but this time, we put in changes to protect the smaller districts from 10% cuts while all other schools were at 1. And 2% reductions. My amendment put a limit to the amount a school district could be cut. These cuts were phased in over a three year period, as our school officials requested. Evidence of what I’m talking about are the schools cash reserves, comparing small schools to larger schools. So called local enhancements, such as auditoriums, pools, Astro-turf and so on. Smaller districts are looking at wAys to use on line courses for instruction. Equal education? SF 117 which later became HB140 were smart cuts that did no harm to salaries or classroom instruction. I’m proud of that. Further evidence of the success of thus bill was that all four of our school districts in this senate district gave raises after the session was completed. Finally no one ever wants to talk about the automatic escalators that increase the funding formula each year to about 15 million per year. To cover rising special needs students and health insurance. It’s funny how that never comes up. All the senate was trying to do was to slow down the increase per year. The WEA is not being completely truthful in giving the entire picture. I was thrown out for simply looking behind the curtain and asking questions. I might be gone, but we still have a big problem as to how are we going to fund education in Wyoming? Because it is unsustainable right now. Cities, towns and counties, be ready, there coming for your 105 million and will give it to education this next session. I won’t be there to defend it this time around.

  3. Here is something that never comes up when the topic is Wyoming education funding , but should : State Lands as a leading funding source for public education .
    That notion is scribed in the bedrock of the Wyoming State Constitution …. state lands are meant to generate maximum dollar returns for the benefit of the schools. That is why state land is more properly called ” School Trust Land”. Every 36 square mile Township of land in all of Wyoming has at least two sections ( = 2 square miles) of state land for that purpose. On the land use maps, the State land is usually the blue-purple tracts. And they aren’t all isolated square mile sections. Quite often there are whole chunks of blue sprawl. Look west of Meeteetse, about 10 miles out. You’ll see a tract of State Land that covers nearly 50,000 acres in one piece. There are others like that.

    So the question becomes: Is the State of Wyoming being diligent in following the Constitution to manage school trust lands for maximum practical return towards education funding ? Are we getting our money’s worth from the 4 million acres of PUBLIC land leased out by the State Land Board to various private interests ? That is a huge can of worms when you start saying that the Stockgrowers and other agrarians are getting longterm sweetheart deals form their state land leases. Fistifights are possible in some venues over that.

    I mentioned all this to Ray Peterson on several occasions in the past few years. Every time he said it was worth taking a hard look at. I also ran it by my other State Senator who happened to be all in on education funding — Hank Coe , who is retiring in 2020— and got a similar response on the record , that the Lej needs to look fresh and hard at State Land revenue. What they say…

    Looking back now , all I can say is it doesn’t appear that anyone in the Legislature looked very long or very hard at the State Land revenuescape. It must’ve been less painful to rabble about tobacco taxes and such than to ask if the ranchers and sodbusters are paying their fair share … for anything.

  4. Add Fred Emerich (Chairman of Travel, Recreation Wildlife and Cultural Resources) and Curt Meier (Chairman of Transportation, Highways and Military Affairs) to the list of departing chairs in the Wyoming Senate, and you’ve got five departing incumbent leaders on the ten primary standing committees. Interesting times, look out.