As revenue from Wyoming’s natural resources industry continues to wane, state legislators are considering alternative options for funding state services, and at least one business lobbying group is pushing back.
All options, from a gas tax and a gross receipts tax, are on the table as the upcoming budget session looms. The Joint Transportation, Highways and Military Affairs Interim Committee sponsored and assigned a number to a fuel tax bill, which, as proposed, contains a 5-cent annual taxincrease on every gallon of gas sold in Wyoming for three years.
“Given the testimony from various interest groups, our committee felt most committed to bringing forth the gas tax option,” Sen. Bill Landen, R-Casper, said in an email.
The money generated would cover the state match necessary to take full advantage of federal dollars coming as a result of passage of the infrastructure bill, he said. Landen, who is chairman of the Transportation Committee, also said the committee forwarded a bill suggesting using the 1% diversion of severance taxes now going to the Permanent Wyoming Mineral Trust Fund as that match.
Revenue generated from a gas tax also would be used to pay for highway construction, repair and maintenance, and not for administration or operating expenses. As proposed, the gas tax would begin at 29 cents per gallon July 1 and would increase by 5 cents for 2023-24 to cap at 39 cents a gallon.
But according to a recent report from the Wyoming’s National Federation of Independent Business, only 18% of those surveyed believe Wyoming should increase its fuel tax to maintain and replace the state’s highways and bridges. Seventy-three percent of respondents would not support a fuel tax.
The NFIB represents about 2,700 businesses in Wyoming, said Tony Gagliardi, the agency’s statewide director. Gagliardi said he did not know immediately how many members were part of the survey, but that it did require a 5% return rate before results were made public.
When asked if Wyoming’s Equal Pay law limit on employer policies should prohibit employees from discussing their pay with one another, 70% responded in the negative, and the survey found an 82% favorable response rate when asked if customers and repair shops should be able to access necessary information from manufacturers to repair their products.
The survey showed 97% opposition to a possible Wyoming gross receipts tax, without a single “yes” vote on that question, Gagliardi said.
“This is probably the worst time in history to be looking at new taxes when businesses are now, by a thread, starting to recover,” Gagliardi said.
But at least one legislator on the Joint Revenue Committee said Wyoming is changing.
“We have had a great run on coal and oil and gas, and it has been really fabulous. We built new schools all across the state with the coal money, we have built new roads,” said Sen. Cale Case, R-Lander. “But that money is going away. The mineral industry that used to support more than 70% of the expenditures of the state is shrinking rapidly.”
Case said that as Wyoming faces more federal restrictions on oil and gas production, the budget pinch will just get tighter. As such, the Revenue Committee was tasked with looking at all options for supporting state government during the interim.
“People need to have schools, we need to have roads,” Case said. “We have to have law enforcement services. You just tick down the list.”
Historically, Wyoming has not had to impose taxes on its residents like a gas tax, an income tax or a gross receipts tax, but that also has meant most everyone in Wyoming “was not paying their way,” Case said.
“In Wyoming, nobody really pays their own way except the mineral industry,” he said.
Many people are simply not used to the idea of any of the taxes under consideration, even though neighboring states like South Dakota have much higher taxes in some cases — including property taxes three times as high as Wyoming’s that fund its school system.
The NFIB said that with $1 billion in American Rescue Plan Act money to spend, and “flush state coffers, small-business owners ask why” these taxes are even under consideration.
Case said that question fails to take the long view.
“There is this malaise about the money coming out of Washington, and the APRA funding, but that is not going to last forever,” Case said. “That is maybe a couple of years, and if we aren’t allowed to produce more oil and gas, then we are going to be in a real fiscal crunch.
“The question is, how do we prepare for that? We have to explore other sources of revenue.”
Rep. Mike Yin, D-Jackson, also a member of the Revenue Committee, said a gross receipts tax is something that most other states have on the books. When a gross receipts tax is applied by large-scale retailers like Walmart, which employ across-the-board pricing in all stores nationwide, Wyoming residents are already paying a tax that benefits other states.
A gross receipts tax in Wyoming may raise nationwide prices at a retailer like Walmart, but a portion of that revenue would then come back to Wyoming.
“Walmart prices include all taxes that aren’t sales taxes, so any corporate tax or gross receipts tax gets priced on their products,” Yin said. “A gross receipts tax would be to ensure Wyoming gets the benefit of that tax, which is built into the price and paid by every consumer, regardless of what state they are in.”
The Revenue Committee has not yet sponsored legislation to create a gross receipts tax and will likely revisit the issue this spring after the budget session has ended, Yin said.
But everyone in Wyoming needs to be thinking about how to pay their way now that natural resource revenue is fading, Case said.
“This is about getting everybody to have their oars in the water. That is one thing we have not done in Wyoming,” Case said. “It was a great ride, but we have to be realistic.
“There is this knee-jerk reaction from this respected business group, and nothing against them. But really, if you ask anybody, they will say they don’t want to pay more taxes. But if you say, ‘How would you like to support our schools? What is your preferred way?’ it is a different question.”