This past week, Wyoming’s Joint Revenue Interim Committee met in Cheyenne and discussed a number of potential tax increases and the creation of some completely new taxes. On the agenda was an increase in taxation for gas, diesel and alternative fuels, as well as off-road recreational vehicles and snowmobiles.
These tax increases passed and will now be brought forward to the January 2020 legislative session. A brand-new corporate income tax also survived, and will be discussed and voted on in full at the next Revenue meeting this fall, as will an optional municipal tax that would allow our local communities to place a tax on the ballot for use in local spending.
A gross receipts tax was mercifully tabled, meaning it will likely not be heard at the next meeting, but, of course, it and any other new taxes could be brought forward in 2020.
At the heart of all of this tax discussion is, first, the state’s immediate problem of having a $300 million spending deficit and, secondly, a concern with the state’s heavy dependence on taxation from minerals. As an industry, it contributes a little over half of all taxes collected and spent in this state. The industry itself, particularly coal, is much beleaguered and prone to bouts of boom and bust, as we recently saw with the terrible case of 700 coal miners being laid off in Campbell County.
Sadly, this is nothing new for the state. When I served in the Legislature, the need to “diversify” our tax structure was a topic that seemed to come up every time mineral wealth fell. But when I first arrived at the Legislature in 2007, our state was in a mineral boom.
Now we like to talk about all of the problems that center around the “bust” part of the mineral boom-and-bust cycle, but we really never talk about actions taken during the booms.
Those actions have had a direct impact on the problems we are now facing, because what we did in the boom cycle was increase spending by expanding government and government services. (A small group of conservatives, including myself, pleaded to put the mineral taxation windfall into savings, but we were outvoted.) Despite no real significant change to the population in Wyoming, our state spending has grown over the past decade, and our state services have increased.
Yet, we are told by folks like the Wyoming Taxpayers Association that Wyoming citizens now don’t pay enough in taxes for the “services” they receive from their government. According to them, Wyoming citizens pay around $3,000 in taxes, but receive around $27,600 in government services.
If you’re like me, you’re thinking, holy cow, that’s a lot of government services. Yes, yes, it is. I don’t know about you, but I certainly don’t feel like I am getting $27,500 worth of government services. From the potholes I dodge in Cheyenne, I feel pretty certain I’m not.
The state currently sits at biennial spending of around $8.9 billion, with about $3.1 billion of that spending coming from revenue flows into the state’s general fund and $3.9 billion coming from a smattering of other funding streams, while the remaining $1.8 billion comes from the federal government. Fifteen years ago, state government was spending half that amount, which means that in the past 15 years, while Wyoming was blessed with a 14% increase in population (70,000 new citizens), government doubled its spending.
Yes, I realize population is not the only factor to consider, but I think it serves as a simple, but clear illustration of our troubles.
The bottom line is that a state with our small, rural (and in recent years, slightly decreasing) population cannot tax its way out of this problem. We can talk diversification until we are blue in the face, but if we don’t face the boom cycle growth in our government and how this has impacted our overall bottom line, we will never truly solve our problems. But we are very, very likely to create a whole new set of worsening problems with our “solution.”
It was said by President Calvin Coolidge that “knowledge comes, but wisdom lingers.” We have the knowledge to know we have a problem with our tax structure, and we may even have the knowledge to know we have a problem with our state spending. But do we have the wisdom to face them both fully?
I fear we will continue to address one of the problems, while never fully examining the other.