Will the 66th Wyoming Legislature choose to be bold?

This editorial ran in the Jan. 17 edition of the Wyoming Tribune Eagle,

If anyone ever gets bored enough to write a history of the 65th Wyoming Legislature, one word that would never appear in it is “bold.”

In fact, you probably have to go back more than 50 years to find an action taken by state lawmakers that anyone would consider bold. And even then, it was a proposal from the executive branch, led by Republican Gov. Stan Hathaway, who, in 1968, proposed a bill to institute a severance tax on mineral extraction in the state.

That bill passed the Legislature the following year, mostly because the state was nearly broke. Five years later, lawmakers tried to increase that 1% tax, but Mr. Hathaway threatened to veto the effort unless they agreed to set aside a portion of the revenue in a long-term savings account. The Permanent Wyoming Mineral Trust Fund was born.

Since that time, Wyomingites have endured the nausea created by the ups and downs of the mineral industry rollercoaster. We’ve enjoyed the highs when prices are up and suffered the lows when they were down. Thankfully, during one of those “highs,” legislators decided to create another, more fluid savings account known as the Legislative Stabilization Reserve Account.

This “rainy-day fund,” as it’s commonly known, was a smart move. But, unfortunately, it also has given lawmakers a reason to avoid dealing with the very serious downturn in coal and oil prices, and avoid taking any real action to diversify the state’s tax base.

Until now ... maybe.

With the state facing current and projected budget deficits in the hundreds of millions of dollars, Gov. Mark Gordon says he has been left with no choice but to propose up to $515 million worth of cuts in order to balance the second half of the current biennium budget (though that could be less due to a recent update to the state’s revenue forecast). In his virtual address to legislators Tuesday afternoon, he said he knows these cuts are “unavoidably painful.”

But we all know one of those words isn’t true. While the cuts certainly are painful, many of them can be avoided. All it will take is some bold leadership from a group of elected leaders willing to do the hard thing, not the popular one.

They should start by reading a new report from Laramie County Community College President Joe Schaffer and Nick Colsch, director of the Wyoming Center for Business and Economic Analysis at LCCC. Building on a single-page analysis by the Legislative Service Office comparing Wyoming’s tax rates with surrounding states, their “Tax Capacity in Wyoming” policy brief is a scant 18 pages, yet contains remarkable insight into the potential to move the state away from its heavy dependence on a single revenue source.

The main takeaway is that all of Wyoming’s current tax rates – sales, fuel, residential property, commercial property and industrial property – are below the median and mean (average) rates of our surrounding states (Colorado, Idaho, Montana, Nebraska, Utah, and North and South Dakota). They’re also lower than the four others that also have no income tax (Nevada, South Dakota, Texas and Washington).

The analysis goes on to note that, among the five states without personal or corporate income taxes, Wyoming’s median household income is slightly higher (by $1,348 a year) and its median hourly wage also is higher (by $2.12 an hour). According to the report, “The median cost of living of these states is 3% higher than the national average, whereas Wyoming’s cost of living is nearly 5% lower than the national average.”

Those differences, when considered together, make up “tax capacity,” the ability for Wyoming residents to pay more without bearing an unnecessary burden. Of course, there certainly are low-income residents who can’t afford to pay more, and those folks cannot be overlooked by lawmakers as they consider any possible tax hikes and related exemptions.

But the report’s estimates of how much money could be generated should make every lawmaker’s ears perk up. Again, according to the report, “If Wyoming were to raise its current sales, property and fuel tax rates to the median rates of other states without income taxes, it would generate $2,347,209,186 over the course of the FY23/FY24 biennium.”

To repeat: That’s more than $2.3 billion in just two years! (And without even suggesting the addition of an income tax.) Of course, no one is going to argue that Wyoming should raise all of those taxes at once or by that much. But with tax capacity far exceeding the governor’s proposed budget cuts, and more than enough to cover K-12 education deficits, as well, it’s clear there’s no excuse for doing nothing.

We believe all options should be on the table in the next few weeks and months as the 66th Wyoming Legislature considers what to do with the budget for the remainder of the current biennium and beyond. Yes, there likely are more efficiencies to be had in K-12 education spending and in other areas. But there’s no excuse for massive cuts that would drain the state of quality teachers and increase class size beyond recommended levels.

We get it: No one wants to pay more taxes. We don’t either. But all Wyoming residents must realize that the average three-person family with $60,000 year in income and a $200,000 home can no longer expect to get $27,050 in government services for $3,180 in taxes. (Wyoming Department of Administration and Information, Economic Analysis Division, 2018)

We also need to define our priorities as a state and then commit to funding them. Do we want our kids to have a quality education and then join Wyoming’s workforce? Do we want to help seniors stay in their homes? Do we want to ensure all residents have access to basic health care coverage and mental health services?

Toward the end of his message to lawmakers, Gov. Gordon said, “... our budget situation requires us to consider things carefully, and demands us to think big and act boldly.” We couldn’t agree more.

The time has come, and the clock is ticking. Wyomingites need bold leadership. They need their elected leaders to take bold action – on the budget and a host of other issues. The question is, will “bold” be used to describe the 66th Wyoming Legislature? Time will tell.