September Committee Meetings
By: Pete Obermueller, Executive Director
Welcome to the last days of summer. The beginning of autumn corresponds with a frenetic schedule of interim committee meetings. Four committees met this week right on top of each other (Appropriations, Judiciary, Corporations and Revenue). I attended Corporations and Revenue, along with several Commissioners. Following is a brief recap of those meetings.
Most of Joint Corporations were issues of tangential interest to Commissioners, but still require monitoring as the discussions tend to meander into our lane. More on that later, but first, the one issue on the agenda specifically of interest to us was discussion on a municipal only voter-option tax. The committee brought up the issue, voted to table it until their next meeting to allow the Revenue committee to take up the exact same issue. In an odd approach to committee management, after voting to table they then took public testimony on the topic anyway, so after a Mayor spoke in favor of the bill I was obligated to express our opposition. I’ll explain that a little more below.
In other interesting developments on that committee, as part of the discussion on municipal financing issues, the city manager of Casper and the mayor of Cheyenne presented a bill that would add surface water drainage infrastructure to the list of public utilities. This would give cities the authority to assess fees on municipal residents for the purpose of repairing and building surface water drainage infrastructure. In stark contrast to a municipal only tax bill, this suggestion from the cities would give them meaningful freedom to address an expensive issue without harming county revenue in the process because the payees would be users of the system.
Finally on Joint Corporations, the committee moved forward legislation requested by the county clerks allowing for the possibility of mail only ballots in any county that chooses to pursue that. The committee also agreed to pursue legislation that would impose residency requirements on all county elected officials. This last one is a result of a Campbell County resident who ran for Weston County attorney and won. We will need to discuss that bill to ensure there is a mechanism to fill positions in the event that no resident is either qualified or runs to fill a position.
Moving over the hill from Thermopolis to Buffalo where Joint Revenue was meeting. This committee had long conversations about the $105 million direct distribution, municipal only taxes, and the philosophy of local government funding, and strategies for correcting significant delinquent payments in mineral ad valorem taxes. The first morning began with two and half hours of discussion on local government funding and the Management Council directive that Revenue come up with ways to replace the $105 million. With the help and guidance of the WCCA Revenue Committee, and Commissioners Willox and Novotny, we offered a lengthy presentation regarding the topic. The testimony offered 3 basic criteria that a replacement must meet to potentially earn our support: 1) That it be a true replacement. Additional voter option taxes are not a true replacement. 2) That the replacement does not widen the revenue gap between big counties and small counties; and 3) That revenue generated in a locality be allowed to remain in that community. I then provided the committee with examples of what they could do to meet that criteria and keep all cities, towns and counties whole. After hearing testimony from WAM, the committee moved forward to their November meeting one bill as a placeholder. That bill would raise the statewide sales tax to 4.5%, take the first $50 million annually from that new source, and distribute it back to cities, towns and counties via the Madden Matrix direct distribution while the rest would be distributed via the normal sales tax distribution formula. I will work on estimating how that change will affect each county, but my initial reaction is that while that proposal meets criteria #2, it does not meet #3, and likely only partially meets #1.
After 2.5 hours on that topic, we shifted to another two hours talking about the municipal only tax bill that Joint Corporations tabled earlier. As a reminder, this bill would allow cities to put on the ballot up to a penny of sales tax collected only in the city, and distributed only to that city. WAM testified in favor of the bill, arguing that it would be another tool for them to deal with declining revenue and to meet infrastructure needs. Individual mayors and WAM agreed that the bill would not help small cities at all, and that this bill should not be used as a replacement for the $105 million. Commissioner Willox and I argued that not only does the bill not help small cities, it actually harms them in the same way it harms counties. Local options voted on and approved in the city only will eventually consolidate local option taxes into the population centers as city residents lose any incentive to support county wide optional taxes. Further, it will not reduce the state’s obligation; as the counties and small cities suffer reduced local option revenue the state will need to backfill that lost revenue. Ultimately the committee voted to move that bill forward to their November meeting by a voice vote (that seemed to me was an 8 – 6 count) because they favor localities taxing themselves. That said, members did acknowledge that the idea might end up reducing revenue to counties and small towns and they would need to remedy that somehow.
Finally, Friday morning the committee reopened the discussion on synchronizing mineral ad valorem tax collections with severance tax collections so that both are monthly. Commissioners Rusty Bell and Mark Christensen did a masterful job of presenting the problem in a sober way without exaggeration, and offered reasonable and flexible solutions that would help industry make a transition from current payments to a new monthly system. Industry is very wary of moving forward to say the least, but the committee agreed that the problem exists and needs to be tackled somehow. They moved a bill forward to November to continue to work on the details and to attempt to find a solution that industry can stomach. It will be a tall order, but the impact to Wyoming in terms of unpaid taxes to counties and schools is significant.
Looking forward to seeing you all next week. Our committees will talk about most of these issues and we will keep you posted as we move forward.