The Wyoming State Capitol Building Wednesday, Feb. 26, 2020, in Cheyenne. Michael Cummo/Wyoming Tribune Eagle

CHEYENNE – In search of palatable revenue-raising measures to help bolster Wyoming’s budget, lawmakers rejected a proposal Friday to impose a state income tax on high-wage earners.

The legislation considered by the Legislature’s Joint Revenue Interim Committee would have established a 4% income tax on individuals with an annual income of $200,000 or more, though other tax credits included in the bill would have placed most of the new tax burden on residents making more than $1 million a year.

In total, the proposal would have raised about $101 million in annual revenue, according to estimates from the Wyoming Department of Revenue. The bill was considered a few days after Gov. Mark Gordon released his supplemental budget that included roughly $515 million in cuts, some of which have already been implemented.

Ultimately, the committee voted against the bill by an 8-6 vote, and there wasn’t much debate between lawmakers on opposing sides. Instead, the committee heard from several members of the public who had mixed opinions on the state income tax.

Tony Gagliardi, director of the Wyoming chapter of the National Federation of Independent Business, which represents more than 2,700 small business owners, told the committee that a tax on business and personal income would hamper economic development in the state.

“We’ve all heard the old saying that perception is reality, and our concern about any conversation, whether it be a new corporate income tax or a new personal income tax, is it stalls investment,” Gagliardi said. “I think at this time, with our economy, we cannot be doing anything that would stall or create hesitation for one to invest either in a new business or creating new jobs.”

Others who testified saw the dynamic from a completely different perspective. Worland resident Phyllis Roseberry, who has lived in the state for 45 years, said an individual income tax offers a “fair solution” to the state’s budget woes, describing it as “less of a tax than an investment in our future that we make generally as a group.”

“The fossil fuel taxes have supported our public services, and they’re waning and, as many people have stated, probably will not return,” Roseberry said. “So if we value our children, we will have to look for more sustainable revenue sources.

“To drastically cut our school budgets will result in crippling our ability to build the skills in our state and our children to compete in the future economy,” she continued. “We will become a backwater, poor state with no hope for its people.”

Her concerns were echoed by Tyler Cessor, a representative from the Wyoming ENGAGE Council, which promotes the perspectives of the state’s younger generations. Cessor said he was worried about what educational opportunities will exist in Wyoming in a few years.

“Without some reasonable revenue measures, it’s increasingly bleak,” Cessor said, noting the state also has one of the lowest property tax rates in the country.

Though the bill up for consideration only imposed an income tax on those making $200,000 or more, Cessor said he and others who fall below that threshold would be interested in contributing more to their state.

Cessor’s testimony also drew a response later on from House Minority Floor Leader Rep. Cathy Connolly, D-Laramie, who worried that “we are not going to be the same state that we are today” with more budget cuts.

“We’re going to lose those young people from ENGAGE – there’s no two ways about it,” Connolly said. “We’re going to lose those 18- to 35-year-olds. They’re going to vote with their feet, and they’re going to move out of the state.”

A few other lawmakers joined Connolly in backing the bill. Rep. Jim Roscoe, I-Wilson, said Wyoming is headed toward a fate similar to Kansas, which closed and consolidated several school districts in the mid-2010s after reducing income taxes across the board.

“If the result (in Kansas) is what we want, we’re heading in that direction,” Roscoe said.

Others on the committee argued the state has some time to figure out its structural issues. Rep. Tim Hallinan, R-Gillette, said the state needs to look at ways to cut education without negatively impacting the classroom, but he was hesitant to support any tax increase until the economic picture becomes clearer.

“I think we’ve got another couple years to see how this COVID thing works out,” Hallinan said. “We may not find that we are in that much of a deficit in a couple of years.”

The income tax proposal was not the only one rejected by the Joint Revenue Committee on Friday, as lawmakers also turned down motions to draft legislation that would remove sales tax exemptions on food purchases, manufacturing and data centers. The proposals could still be revived, either by individual legislators or by the Joint Revenue Committee during its next meeting.

The committee also did not discuss a corporate income tax, a proposal that nearly passed in the 2019 legislative session, though lawmakers left the possibility open for consideration at future meetings.

“(With) the personal income tax, I’m fine with going down this road a bit, but I think that the corporate income tax is really where we need to be,” committee co-chair Sen. Cale Case, R-Lander, said.

The Joint Revenue Committee will hold its next meeting Dec. 17-18.

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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