CHEYENNE -- After enjoying several years of economic prosperity, the Legislature’s Joint Interim Revenue Committee is now turning over every stone for potential ways to bring in more money to state government.

With state revenues projected to drop $383 million over the next two years, committee members this week will consider proposals ranging from a fuel tax hike and reactivating a state property tax levy to scrapping dozens of tax exemptions on everything from groceries to fire stations.

But with the state’s economy and energy industries in a slump, many legislators say they want to focus on decreasing state spending instead of raising taxes during the legislative budget session in February.

“Wyoming is in a cautious mode right now,” said Rep. Owen Petersen, R-Mountain View.

The proposal that appears to have by far the best chance of passage is a plan to raise the state’s tax on gasoline and diesel fuel by 10 cents per gallon over the next two years.

Wyoming’s current tax rates of 14 cents per gallon for both gasoline and diesel fuel were the second-lowest in the nation as of last month, according to the American Petroleum Institute.

However, a 10-cent tax increase wouldn’t all be passed on to consumers, as fuel companies would absorb some of the cost, said Rep. Mike Madden, R-Buffalo.

Madden estimated that a 10-cent gas tax increase would bring in about $70 million annually; the money would be split between the counties and the state for highway maintenance.

While various gas tax increase proposals have drifted around the Legislature for years, there hasn’t been much political support for the idea -- until now.

Last month, Gov. Dave Freudenthal softened his longtime opposition to a gas tax hike, telling reporters that he’d be “willing to take a look at” an increase if the Legislature passes it.

“I would think all legislators are going to have to take a serious look at that,” Madden said.

Another suggested bill would revive the state’s property tax levy for the first time in decades, raising the state's mill levy rate from zero to 4 mills. At that rate, the owner of a $100,000 house in Wyoming would pay about $38 per year in state property tax, in addition to local property taxes.

However, many Revenue Committee members said they were skeptical of the proposal.

“That has no chance,” Madden said.

A third proposal would tax electricity generated in Wyoming by wind power and other renewable sources of energy. However, that bill’s chances in the Revenue Committee are “not very good,” said the committee co-chairman, Rep. Rodney “Pete” Anderson, R-Pine Bluffs.

As well as considering tax hikes, the Revenue Committee is looking at lifting many property and sales tax exemptions.

One proposed bill would temporarily repeal about 40 different state sales tax exemptions on products ranging from groceries and farm implements to livestock and newspapers.

A second piece of legislation would make industrial pollution control equipment, as well as fire stations and firefighting equipment, subject to property taxes.

A third draft bill would make energy companies pay severance taxes on oil or gas vented while developing new wells.

Overturning those exemptions, however, will likely prove difficult, thanks to significant political opposition from the recipients of those tax exemptions.

Indeed, with the 2010 budget session more than two months away, most – if not all – of the proposals considered will either be killed or modified before they make it to the House or Senate.

But when the Revenue Committee meets Wednesday and Thursday in the State Capitol, committee members might not be so quick to dismiss an idea as in years past.

“It’s probably going to be a completely different feeling now, especially for legislators elected during the good years,” said Rep. Ken Esquibel, D-Cheyenne.

Contact capital bureau reporter Jeremy Pelzer at (307) 632-1244 or jeremy.pelzer@trib.com.