Good revenue news offers Wyoming opportunity for reform


Don’t look now, but Wyoming just dodged a fiscal bullet.

The smart thing to do would be to count ourselves lucky, then get out of the line of fire before the next round comes flying down range. But if history is any guide, I expect our Legislature will keep the state right where it is.

Wyoming state government has once again been delivered from a huge budget deficit, this time by a combination of unexpectedly higher oil prices and investment returns.

That’s obviously good news, but in the long-term it will likely postpone (again) a serious review of the state’s tax structure and efforts to diversify our economy — both of which are desperately needed for our future security.

If there’s ever been a time when the state needs to break the  boom-and-bust cycle, it is now. The revenues that state government are projected to receive for the next biennium should save us from some of the draconian cuts the Legislature had been eyeing in anticipation of a looming $1 billion “structural deficit.”

But it won’t keep the inevitable next deficit at bay. Wyoming can’t keep pinning its future on found money, whether it’s renewed fossil fuels development, continued high stock prices or the types of manna from heaven that have bailed it out in the past. (Inheritances left to the state by wealthy residents in the 1990s come to mind as a particularly notable miracle.)

When the Legislature convenes in January, there will still be some who maintain that cuts to public education funding are necessary. They will also target social safety nets that have already endured budget reductions in recent years.

Lawmakers embarked on a weak effort to review our tax structure in recent years, directing the Joint Revenue Committee to find ways to generate up to $300 million a year in new funds.

Despite the efforts of House Revenue Chairman Mike Madden (R-Buffalo) and his Senate counterpart, Ray Peterson (R-Cowley), to take their charge seriously, it was generally conceded from the outset that whatever the committee came up with would never make it past the full Legislature.

This was despite Madden literally begging members of the panel to move some reasonable tax measures forward, including ones on liquor and tobacco, so they could at least be discussed on the floor of the House. Peterson, meanwhile, predicted his own political demise when he noted at a meeting that he would not possibly be able to explain to constituents why he wanted to raise their taxes.

It was a wasted two years for committee members and the lobbyists who followed them around the state arguing against any tax hikes. The Senate, led by its president Eli Bebout (R-Riverton), was never going to allow any tax legislation to be discussed, period.

That included tax increases on liquor and cigarettes — which admittedly wouldn’t have put much of a dent in the deficit — as well as property tax hikes that would.

And forget any talk of creating either a personal or corporate income tax. The topic is considered political suicide by most legislators even though it’s the best opportunity to give Wyoming the stable revenue needed to wean itself from the volatile minerals extraction industries. Today they fund up to 70 percent of state government and carry us helplessly through their highs or lows.

The last serious effort to review the state’s revenue options, the Tax Reform 2000 Commission, issued its final report in 1999 after nearly two years of research and statewide meetings. Its top recommendation was creating a state income tax on individuals and corporations. But then came the next natural gas boom. The lean times were forgotten and the report was shelved.

When the Joint Revenue Committee began its work three years ago, the sole voice speaking on behalf of such a move was Rep. Cathy Connolly (D-Laramie). The idea went nowhere.

A state income tax on individuals, contrary to popular belief, would not empty their wallets. Thanks to a 1973 constitutional amendment advanced by House Speaker Nels Smith (R-Sundance), an income tax would have no effect on the vast majority of people who make less than $50,000 a year because of a credit they would receive on sales, use and property taxes.

No, the bulk of the revenues produced by a personal state income tax would be paid by the state’s wealthiest residents — the same ones who just received a massive federal tax cut. What is so wrong with asking the super-rich to help fund state government?

Wyoming is one of only seven states without a corporate income tax, yet there is no stampede of industries that wants to move to Wyoming because of its ultra-business friendly tax structure. The Wyoming Business Council has had some successes since the 1990s and the ENDOW Initiative holds promise, but there has not been anything close to the business development needed to serve as a replacement for the minerals industry when times get tough.

Worse yet, if there had been such a stampede it would have bankrupted us. Because our current tax system is so dependent on energy production, new workers in other fields actually cost the state more in services than they contribute in taxes.

Instead of doing everything in their power to promote the renewable resources that Wyoming has in abundance, like wind and solar power, our state and congressional leaders keep bemoaning the so-called “war on coal.” They refuse to recognize what the free market figured out a long time ago: The days of king coal are behind us, and they’re not coming back. 

I don’t expect the Legislature or the new governor to go on a spending spree because of the latest budget bailout. Neither will be that foolhardy. That’s the good news.

The bad news is they’re also unlikely to act on the opportunity we’ve been given. Since we’re no longer staring down the barrel of a massive deficit, it’s time to pass legislation that could both improve health care and raise stable revenues for the future.

That includes passing Medicaid expansion and approving medical marijuana. The Legislature’s unconscionable failure to expand Medicaid to more than 20,000 low-income residents since 2013 was one of the worst decisions it has ever made.

Medicaid expansion had the strong support of businesses, hospitals, social service agencies and religious organizations — all interests that lawmakers usually listen to in earnest. In addition to keeping an estimated 20,000 low-income residents from enrolling in the health insurance program, it sacrificed more than $120 million in federal funds annually.

Those funds would have gone a long way to reducing the state’s budget deficit. We missed the boat on 100 percent reimbursement but the state could still have the federal government pay at least 90 percent of the costs of Medicaid expansion.

Wyoming also has an opportunity to raise significant tax revenues by finally approving medical marijuana, which has the support of 86 percent of Wyoming residents, according to a new poll by the Wyoming Survey and Analysis Center at the University of Wyoming.

The state could bring in even more tax revenue by following the example of Colorado and approving recreational marijuana, which the poll found 49 percent support for. The percentage backing recreational use has increased by 12 percent in the past four years, and that trend is sure to continue.

The Legislature will have a lot on its plate in the next session. But in addition to following the will of its residents and passing popular revenue-producing measures, it must face reality and come to grips with the overwhelming need to look beyond the minerals industry and the rise and fall of the stock market. Let’s lift Wyoming to a place where we don’t need to rely on miracles for our economic security.

Kerry Drake is a veteran Wyoming journalist, and a contributor to WyoHistory.org. He also moderates the WyPols blog. He has more than 30 years experience at the Wyoming Eagle and Casper Star-Tribune as a reporter, editor and editorial writer. He lives in Casper.

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