CHEYENNE – The Wyoming Legislature could consider a short-time compensation program for employees whose hours have been cut, a stipend program for reeling large businesses, and a temporary tax cut on oil and natural gas production, if lawmakers hold another special session in the coming months.

Lawmakers on the Joint Minerals, Business and Economic Development Interim Committee advanced three bills Wednesday aiming to boost parts of the state's economy as the COVID-19 pandemic continues into August. 

The first piece of legislation, which had the most widespread support of the three, would establish a short-time compensation program for the state. The program, which already exists in 26 states, allows employers to avoid layoffs by supplementing the pay of employees whose hours have been cut.

Robin Cooley, director of the Wyoming Department of Workforce Services, told the committee Wednesday that the setup has been wildly popular in other areas during the COVID-19 pandemic, with more than 400,000 short-time claims made nationwide in the first week of July.

“The cost of hiring individuals and training them is tremendous, and what this will do is keep those individuals' job attached to you, develop their loyalty because you're willing to do that for them, and then they'll come back,” Cooley said. “Although I couldn't give you hard data on that, I think that intuitively it's going to save money for employers."

The program could be set up with roughly $177,000 in federal CARES Act money, though that could only happen if the bill becomes law by the end of the year. Federal aid from the CARES Act must be spent before Jan. 1.

Lawmakers on the committee also advanced a bill designed to help larger businesses, providing stipends of up to $1.5 million to companies with at least 100 employees in the state.

The legislation largely mirrors a few that passed during the Legislature’s special session in mid-May to help smaller businesses. As currently drafted, a total of $10 million of the state’s federal relief money would be available for the stipend program.

The legislation had the support of representatives from the Wyoming Mining Association and the oil and trona industries. Rep. Donald Burkhart Jr., R-Rawlins, who helped craft the bill, estimated that roughly 30 companies in Wyoming would qualify for the program, noting many of them were not eligible for the federal Paycheck Protection Program.

“(The bill) was to provide some ability for them to recoup some of their losses and making those payrolls, their losses in sales and to provide them some relief that have been provided to other companies,” Burkhart said. “Those 30 (companies) employ probably several thousand employees."

The legislation for the stipend program ultimately passed by a 13-1 vote, with only Senate Minority Leader Chris Rothfuss, D-Laramie, raising concerns about the effort.

The bill requires qualifying businesses to demonstrate a year-to-year monthly drop in revenue or sales of at least 25%, rather than a loss in profit. Rothfuss, the only Democrat on the committee, worried the rules of the program could be manipulated by corporations to increase profit margins, rather than fill payroll needs.

“You could have a high profit year, followed by a very low profit year that leads to us spending $1.5 million that goes directly in 10 cash payments to shareholders,” Rothfuss said. "I don't see why that isn't plausible – I mean not just possible, but plausible – under this legislation."

Following votes on the other two bills, lawmakers then approved a one-time tax exemption on new oil and natural gas activity that, when applied, essentially cuts the severance tax rate in half for producers. 

Pitched by lawmakers and industry representatives as a way to kick-start some drilling activity in the state, the legislation would temporarily drop the severance tax rate on oil and natural gas production from 6% to 3%, but only once industry price benchmarks have risen to sustainable levels.

For example, oil producers could use the one-time tax exemption for six months within a 12-month period after West Texas Intermediate crude oil prices reach $45 per barrel. After hitting a subzero pitfall amid the COVID-19 pandemic and a Russia-Saudi Arabia price war, the WTI barrel price sat around $40 as of Tuesday afternoon.

During the meeting, Petroleum Association of Wyoming President Pete Obermueller told lawmakers that only one rig was currently operating in the state. The benefits of getting more rigs up and running, Obermueller argued, far outweigh the short-term hit the state would take on its severance tax revenues.

“Oil and gas pays nearly 41% of all property taxes, so ... it's much larger than just talking about narrowly focused on the argument of the dollar-for-dollar on the severance side,” said Obermueller, who also noted the substantial job creation that comes with each rig in operation.

But several others who testified to the committee cautioned against giving tax breaks to the oil and gas industries, especially given the projected $1.5 billion revenue shortfall facing the state over the next two years.

"Oil is the one possible bright light we have for the state regarding a stronger and recovery market and to help generate revenue for our state budget,” said Steff Kesler, program director for the Wyoming Outdoor Council. “We need every penny of these severance taxes.”

The committee ultimately approved the one-time reduction for the oil and natural gas industries by a 12-2 vote, with only Rothfuss and Rep. Tom Crank, R-Kemmerer, voting against it. The bills could be considered during a legislative special session if one is held over the next few months, though no decisions have been finalized.

Tom Coulter is the Wyoming Tribune Eagle’s state government reporter. He can be reached at tcoulter@wyomingnews.com or 307-633-3124. Follow him on Twitter at @tomcoulter_.

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