May 15, 2017
What was meant to be the first big step in fixing Wyoming’s budget crisis started with a whimper and ended with a mining-funded happy hour, as the legislature’s Joint Revenue Committee met last week in Saratoga and accomplished essentially nothing.
The importance of the committee’s task can’t be overstated: Faced with a budget crisis that includes a $400 million annual shortfall in education, state legislators need to find sources of revenue to balance the budget or face massive cuts to public services and the basic functioning of our state.
We’re nowhere near feeling the full effects of the budget crisis, but the tip of the iceberg is showing: Already, folks involved in suicide prevention are scrambling to run programs on a volunteer basis, since the state stopped funding their efforts even as Wyoming’s suicide rate remains among the highest in the nation; and the University of Wyoming cut five programs and laid off two dozen employees this week—a fraction of the estimated 600 positions the institution will eliminate over the course of two years. Other state agencies risk closing their doors, more layoffs are looming, and private sector companies that rely on government contracts are in jeopardy, too.
This is why the Legislative Management Council made finding more money the Revenue Committee’s top priority. The panel was directed to look at a study from the Tax Reform 2000 Committee, which made a highly controversial recommendation nearly 20 years ago to establish both private and corporate income taxes. Reviewing the study would kick off new talks about what potential taxes might be imposed today.
No expertise, no guidance, no progress
Anticipation was high Thursday afternoon, after a mostly humdrum morning, when the review of Tax Reform 2000 finally arrived on the docket. But expectations were quickly deflated when a Legislative Service Office staffer meant to describe the overall situation to the committee introduced himself by saying, “Now, I’m not a tax expert …”
Wait, what? At the official legislative meeting where lawmakers face the monumental and complex task of restructuring Wyoming’s tax code, is it too much to ask for an actual expert to guide the process? Apparently, the LSO just doesn’t have anyone who’s an expert on taxes, which might have something to do with Wyoming’s screwball situation in the first place.
The inexpert LSO staffer droned on like your worst high school teacher for the next half an hour, reading from a PowerPoint that showed charts of where other states’ revenues’ come from (hint: much of it is from state income tax).
The glaring lack of unbiased expertise continued with the next speaker, Sven Larson, a Swedish blogger recently fired from the Wyoming Liberty Group, a right-wing think tank backed by billionaires like Gore-Tex heiress Susan Gore (who once secretly adopted her ex-husband to get more of her family’s inheritance) and Dan and Carleen Brophy (who sued Wyoming to remove campaign spending limits so they could leverage their fortune to back far-right candidates).
Now an “independent consultant” with ties to the Koch brothers-founded Cato Institute, Larson adopted the same doom-and-gloom tone he employed in his fear-mongering book Industrial Poverty: Yesterday Sweden, Today Europe, Tomorrow America to address the committee. He began his testimony by rattling off a laundry list of figures to illustrate the shoddy state of Wyoming’s economy, as though the legislators were unaware that we’re in a bust. He told the committee to ignore economic textbooks that say declines tend to be followed by recovery: Even though some Wyoming job sectors are stabilizing, Larson said, “We are not going to go back to some sort of recovery—we are down and we’re going to stay there for the foreseeable future.”
All of this was meant to preface Larson’s policy recommendation, which, to the surprise of no one, was to not raise taxes at all and instead continue to cut public services. If the legislature must raise taxes, however, Larson said they should do so in the form of sales tax. He omitted the fact that a sales tax is among the most regressive forms of tax possible, in that it affects working- and middle-class people most, and people like his wealthy overseers least.
Tax Reform 2000 collects more dust
Weary from Larson’s self-described “rant,” the Revenue Committee decided to call it a day and skip what was meant to be their main task: reviewing Tax Reform 2000. That document was created during Wyoming’s last bust, in a similar environment of anti-tax sentiment conflicting with a desperate need for new revenue to keep Wyoming functioning. Its creators took hard looks at Wyoming’s tax code and made unpopular but rational recommendations on how to avoid further boom-and-bust revenue fluctuations. But they were saved from political backlash when the fracking boom of the early 2000s brought the state’s economy back to life, and their report went onto the shelves to gather dust.
Tax Reform 2000 estimated that an individual state income tax alone might bring in $150 million a year, which adjusted for inflation would be about $220 million today. The creators decided they didn’t have the data necessary to estimate how much money a corporate income tax could generate, which is inconvenient, but in states surrounding Wyoming today, corporate income tax generates around 12 – 20 percent of what their income tax generates (so in Wyoming it might be in the ballpark of $30 million annually, but don’t quote us on that; we’re also in the process of finding that elusive unicorn: the Wyoming tax expert).
But instead of poring over these and other recommendations from Tax Reform 2000, the Revenue Committee punted the job down the road. Running about an hour behind schedule on Thursday, co-chairmen Sen. Ray Peterson (R-Cowley) and Rep. Mike Madden (R-Buffalo) took the committee’s temperature and announced they would “carve some time out” at a different, undetermined day in the future.
While perhaps this decision was better than trying to cram the important discussion about Tax Reform 2000 into a late, bleary-eyed afternoon, it was frustrating for many of the 60-some people at the meeting who were hoping to witness and participate in it. Instead, many of the Revenue Committee members and their hangers-on retired across the street to the bar at the Hotel Wolf, where lobbyists from the Wyoming Mining Association were buying drinks.