Spring Committees, Part 1

Posted by kelli.little on June 5, 2018

By: Pete Obermueller, Executive Director and Kelli Little, Deputy Director

Time to catch up on committee interim work for the spring.  It’s been a little halting in terms of topics and attendance, so rather than four separate reports, the following covers the relevant activities of Joint Revenue and Joint Transportation.  Part 2 will cover Minerals and Corporations Committee meetings.

Beginning with Revenue, there were several topics discussed of interest to Commissioners.  The first was a discussion on changing the sales tax collection on motor vehicle purchases to the point of sale instead of at the county courthouse.  Under current law, a purchaser of a vehicle sold by a vendor has 65 days to pay sales tax at the county courthouse.  In larger counties, that experience is time consuming as it requires waiting in line to visit the Clerk, the Treasurer, and the Clerk again in order to pay registration, pay taxes, then receive the Title.  Additionally, there is a small percentage of the population that does not pay their sales tax, and we heard testimony that there is a way to circumvent paying the sales tax and still receive a title at sale of the vehicle.  Changing the point of sale to the dealers would help correct both of these issues.

The County Treasurers Association testified that they opposed changing the point of sale because doing so would result in a net loss of revenue to counties.  They are correct because there is a subset of people who fail to pay their sales tax within the legal window because they simply forgot, and they end up paying interest and penalties on the tax.  The penalties are deposited 100% into the county general fund.  If the collection were moved to point of sale, counties would lose those penalty dollars.   

The County Clerks Association testified in favor of changing the point of sale largely using the argument that while the Revenue Committee is looking at new revenue sources, they should first make sure we are collecting all the taxes currently on the books.  They also made the case that collection at point of sale makes payment of these taxes easier for Wyoming’s taxpayers.

I testified that during the last legislative session the WCCA supported the bill that changed point of sale to the dealers.  I argued that to my knowledge there is no Commission in the state that makes any budget decisions based on a assumption of a certain number of people forgetting to pay their taxes and so we receive a penalty bonus.

In the end the committee agreed to request a bill draft to discuss again at a later meeting, and also include more information on how to close the bonding for title loophole that potentially allows people a path to avoid paying sales taxes.

Following that discussion, the committee heard a very interesting report on a dynamic modeling of the costs vs. revenue of when new industries move to Wyoming.  Spoiler: under our tax structure it costs the state more money in services than the revenue generated by new industries that employ 100 new people in every sector except energy.  Not directly pertinent to counties, but very interesting nonetheless.

The afternoon was spent discussing the $105 million direct distribution.  The management council required the revenue committee to evaluate how that amount could be reduced or eliminated.  WAM was unable to attend the meeting, so most of the time was taken by my presentation,which can be found on the LSO website here.  Additionally, this committee meeting was live streamed, so you can go back and watch this section (or any section), so you know exactly what happened.

Because the directive was to reduce or eliminate the $105, I took the opportunity to suggest ways that could be done.  What I suggested was that they could reduce or eliminate the $38 million that goes to counties in the biennium by a combination of redistribution of state revenue (sales and severance taxes) with small, ¼ cent increases in the statewide sales tax, and small, ¼ percentage point increases in the property tax assessment.  Those very small steps would raise enough revenue to get counties out of the direct distribution.  Importantly, that only works if a mechanism is put in place to ensure distribution protects low revenue counties and allows high revenue counties the ability to keep what is created in their counties.  I suggested a distribution model similar to PILT, whereby new revenue generated in a county would offset the direct distribution dollar for dollar.  Thus, Laramie County would realize new revenue beyond what they receive from direct distributions, so the direct distribution would go to zero; but Hot Springs County would only realize a small amount of new revenue, so their direct distribution would still be high.

There was significant interest from the committee in the distribution approach, but part of my testimony was to point out that if the legislature wants to be serious about replacing the $105 million it will require them to raise new revenue.  There is no other way to do it that doesn’t either reduce local revenue or reduces state revenue.

The only bill the committee moved forward for drafting and further discussion was our old friend from last year that would allow municipal only local option taxes.  If we want to offer a specific bill on replacing the direct distribution, we will need to draft it and present it at a future meeting.

Finally, there was a robust discussion among the committee on the potential of indexing fees to some measure of inflation.  For example, had the fee on corporations’ filings been indexed since its inception, today it would be about $100 instead of its current $50.  They committee agreed to draft a bill that does index some fees, but the vote was a close split.  That is something for us to watch as we have several fees at the county level that could be attached to a potential indexing bill.

Moving on to Transportation, which was meeting at the same time so Kelli attended and worked on a couple of items of interest.

Joint Transportation held their first meeting of the 2018 interim June 4 & 5 in Sheridan.  There were three topics of interest to the WCCA.  The first topic of interest was a discussion on the modernization and maintenance of Revenue Information System (RIS), the method by which Wyoming identifies its residents, and options to move forward with deployment of RIS replacement.  The committee was briefed on the current iteration of RIS, which is a server-based “mainframe” system, with the hope to move towards more cloud-based record retention and operation in the future.

Eda Schunk Thompson, Sheridan County Clerk, and Hans Odde, Park County Deputy County Clerk, presented to the committee on behalf of the Wyoming County Clerks Association on the diverse ways the Clerks’ offices use RIS.  They made the point that each county is different, some use RIS extensively and some not at all.  Most have their own systems that have been invested in with county dollars.  The Clerks asked that any future participation by the counties in a revamped state-wide system be voluntary.  The WCCA will be watching this topic closely, as user fees were discussed as an abstract possibility, which could mean counties that opt to use the new RIS would pay for the service.

The second topic was an information gathering session for the committee on funding for Wyoming roads.  Our friend Dr. Ksaibati at the Wyoming Technology Transfer Center and Local Technical Assistance Program gave the committee a great overview of the current infrastructure asset management of Wyoming’s roads and briefed the committee on his work with the counties on the county paved road asset management system. He also expressed his hope to be able to help the counties inventory and evaluate the condition of county gravel roads in the future.

It was my turn then to give the committee a refresher crash course on the current funding model for county roads from the gas tax, diesel tax and severance tax. I shared with the committee the pertinent pages from the WCCA Revenue Estimating Manual for road funding.

A representative from the National Conference of State Legislatures presented on how other states around the country are funding their roads as fuel taxes become less relevant as electric vehicles and more efficient gas vehicles become more common.  Some of these options include Vehicle Miles Traveled fees, tolling/priced lanes, and electric vehicle fees.  This topic is large and expansive, and there was no defined goal of the committee beyond information gathering.

The last topic of the day was my old friend, revamping the current method of figuring vehicle registration fees. The committee would like to change the fee structure to make it more equitable, however the counties have provided a consistent and clear request that any changes made be revenue neutral.  Carla Faircloth, Johnson County Treasurer, was present representing the Treasurers Association but didn’t have any new formula options to present to the committee.  This topic will be revisited, and the committee made it clear that they hope the counties can come up with some ideas.  I will be working with our Transportation Committee, the Clerks and Treasurers, as well as some Joint Transportation Committee members to hopefully come up with an acceptable solution.