Wyoming Legislature shoots down “big box” corporate income tax and all other revenue-generating bills — 2019 Legislative recap
Like empty beer cans set up at close range, bills to raise new revenues were shot down one after another during the 2019 Wyoming Legislative session.
Modest gains in oil revenues have brought an end to the worst of Wyoming’s most recent bust. But the Legislature has yet to figure out new revenues to fund public schools now that the coal industry has plummeted, probably for good.
State agencies are also operating with their smallest budgets in 15 years, while scores of public services go un- or underfunded.
Meanwhile, the state has yet to diversify its tax structure—a process that must take place if Wyoming has any hopes of diversifying its economy beyond the mineral industries.
But the 2019 Legislative session proceeded the same as any other in recent times: For every proposed tax bill, the Legislature had a bullet.
Big hopes for a “big box” tax
At one point, House Bill 220 seemed to have the best chance of passing. The proposed corporate income tax on “big box” stores had the backing of legislative leadership. It would have also helped solve one of the Legislature’s biggest problems: How to fulfill the constitutional mandate of funding public education.
The Wyoming Department of Revenue conservatively estimated the tax would raise $45 million for Wyoming public schools. The Legislature has slashed the statewide education budget by more than $100 million over the past three years, and it still isn’t balanced.
HB-220’s supporters maintained that its 7 percent tax on corporations with more than 100 shareholders—including “big box” retail stores like Wal-Mart and national restaurant chains like Applebee’s—wouldn’t affect consumer prices, since national companies charge the same prices for goods and services throughout the country.
The bill’s sponsor, Rep. Jerry Obermueller (R-Casper), explained that these national corporations pay income taxes in the states where they are headquartered. They spread their tax costs to all their customers, including those in Wyoming. As a result, Wyoming consumers pay a “hidden tax,” he said.
Effectively, shoppers at Walmart in Wyoming are paying for Arkansas’ roads. Obermueller’s bill aimed to change that.
Big opposition, too
The House bought the concept and passed HB-220 overwhelmingly. But corporate lobbyists, anti-tax activists, the Wyoming Liberty Group, and the Wyoming Republican Party all lined up to kill it in the Senate.
“None of us campaigned on raising a corporate income tax, none of us did. If we did, we wouldn’t be here.”
For four hours they testified to the Senate Corporations Committee, claiming the bill would force layoffs and higher prices.
Sen. Bo Biteman (R-Gillette) said the bill’s sponsors wouldn’t stop at this sneaky attempt to institute an income tax in Wyoming. He said if the bill passed it would pave the way for personal income taxes and other measures that would kill lawmakers’ chances of re-election.
“None of us campaigned on raising a corporate income tax, none of us did,” Biteman said. “If we did, we wouldn’t be here.”
Tammy Johnson of the Wyoming Education Association reminded the committee that Wyoming’s Constitution explicitly calls on the Legislature to levy taxes to fund public schools.
“This is one way to fix the ‘structural deficit,’” she said. “We can’t turn our nose up at opportunities like this when they come.”
The committee’s chairman, Sen. Bill Landen (R-Casper), sounded convinced that HB-220 was a good idea. His co-committeeman, Sen. Cale Case, ardently supported the measure.
“Have we tightened budgets? Yeah, we have,” Landen said. “So when people say it’s a spending problem and not a revenue problem, the hair goes up on my neck. If [the time to rise taxes] isn’t now, then when?”
But Landen said he knew the bill didn’t have the votes to pass the Senate, so he didn’t even have his committee vote on it. The measure died with a whimper.
Rumors swirled the Jonah Building that it would be back, but that never happened. The Joint Revenue Committee will review it during the interim session.
The exemptions stand
Another tax bill that inspired high hopes sought to “modernize” Wyoming’s sales tax by eliminating exemptions that benefit a slew of special interests and industries in Wyoming, from heavy equipment to ski passes.
House and Senate leaders had supported House Bill 67, but lobbyists for those industries managed to kill the bill before it even received a House Appropriations Committee hearing.
The measure also included the repeal of the popular sales tax exemption on groceries, which would have surely met with public resistance if the bill had advanced.
HB-67 would have effectively lowered and broadened the state’s sales tax, allegedly making it “revenue neutral.” It would have added an estimated $33 million to local government revenues each year, while decreasing total revenues to the state by about $3.1 million.
Up in smoke
Two proposed cigarette tax bills died.
The House Revenue Committee rejected House Bill 218, which would have raised cigarette taxes $1 per pack, from 60 cents to $1.60.
“Smoking cigarettes is a vice. It’s bad for people, it causes cancer, it does lousy things to people. It’s terrible for our youth.”
The committee’s chairman, Rep. Dan Zwonitzer (R-Cheyenne), sponsored the bill. But he could not muster the support of his colleagues, and the measure died on a 5 – 4 vote.
House Bill 282, which sought only a 50-cent per pack increase, went further. It died in the House on third reading, was brought back, and then died again on a procedural deadline when it wasn’t heard by a Senate committee.
HB-282 would have also taxed “vape” products for the first time in Wyoming, at 20 percent of the wholesale purchase price. The bill would have generated an estimated $8.3 million annually for the state’s General Fund and $1.5 million for local governments.
“Smoking cigarettes is a vice,” said Joint Appropriations Committee Chairman Bob Nicholas (R-Cheyenne). “It’s bad for people, it causes cancer, it does lousy things to people. It’s terrible for our youth.”
But Rep. Tyler Lindholm (R-Sundance) and others scoffed at the notion that higher taxes would improve public health.
“What happens if we raise this tax? Are we going to get people to quit?” Lindholm said. “No, that’s not going to happen.”
During the final days of the session, one revenue bill still stood: a 5 percent lodging tax aimed at promoting Wyoming’s $3.8 billion tourism industry. It easily cleared the House, but got knocked out in the Senate on final reading by 7 – 19 vote.
Backers of lodging tax claimed it would mostly impact out-of-state tourists. But opponents in the Senate said Wyomingites traveling to sports tournaments, visiting families, and sight-seeing wouldn’t be spared.
House Bill 66 would have generated an estimated $19.5 million annually for the state’s tourism sector. Eighty percent would have gone directly to the Department of Tourism, and the remainder put in a special projects account.
Business owners in the Wyoming tourism industry strongly backed the measure—for the most part.
In the end, it was two hotel owners who happen to serve in the Wyoming Senate who helped sealed the bill’s fate.
Sens. Cale Case (R-Lander) and Liisa Anselmi-Dalton (D-Rock Springs) own hotels in their respective hometowns. Although they both declared conflicts of interest and did not vote, they were the most vehement opponents of the statewide lodging tax on the Senate floor.
“It’s just making it more expensive to stay around Wyoming,” Case said.
“Why can’t we just add on 1 percent to the general sales tax? These are not difficult lifts,” Anselmi-Dalton suggested.
Meanwile, Case co-sponsored House Bill 96, which would have added $4 to the existing $1 per megawatt tax on wind power. But it and two other wind tax bills quickly died, leaving Case to speculate there could be an attempt to put a proposed wind tax on the ballot in 2020.
The House Revenue Committee also rejected House Bill 233, which would have created a personal state income tax to help fund education. A proposed property tax hike with the same purpose was also killed in the House.