Senate Chambers

Senators work in the Wyoming Senate chambers Jan. 11 at the Wyoming State Legislature in Cheyenne. Cities and counties wrangle over who can raise taxes. .

FILE, Star-Tribune

CHEYENNE — Shortly before a special election for a “sixth-penny” tax here last spring, Mayor Marian Orr tried moving the vote to the next general election to study the measure a little more. But, she said, the Laramie County commissioners said no.

“Our relationship with the county commissioners is a good one,” Orr told the Interim Joint Revenue Committee on Monday. “But when it comes to taxes, I’ll be honest, the county really does control the process.”

Some of the projects connected to the sixth-penny ended up passing, but one proposition that would have funded upgrades to fire department facilities was shot down, a setback for a growing city, Orr said.

The revenue committee agreed to move ahead with crafting a bill that would allow cities to pass local option sales taxes without county involvement, despite the objections of county commissioners who said such a move would shut out the voices of consumers who pay city sales taxes but live outside municipal boundaries.

“It basically would cut the country residents out of getting to vote on where we spend most of our money,” said Campbell County Commissioner Rusty Bell. “County residents spend their money in the municipalities.”

Currently, local governments can ask voters to pass temporary sales tax increases and many cities and counties rely on funds from these taxes to pay for special projects, especially infrastructure and capital construction. But in order to make it to the ballot, both the county commissioners and two-thirds of city or town councils within a given county must approve it before a tax question can be sent to voters.

The Wyoming County Commissioners Association wants it to stay that way out of concern that not only county residents would get boxed out of voting on sales taxes that they would end up paying, but also because if city residents pass a tax within municipal boundaries they might then be reluctant to approve an additional county-wide tax, leaving the county government without important funds.

But Sen. Cale Case, R-Lander, argued that cities should be able to tax themselves if they so choose and as a means of reducing the dependency of local governments on Cheyenne for funding. Cities and counties in the state have far less ability to levy taxes or raise independent revenue than those in most other states.

“Wyoming has developed a very unhealthy situation in terms of local government funding,” Case said. “These communities don’t have skin in the game. They don’t hold their local elected officials accountable.”

If cities were to try and raise their taxes locally, politicians would be forced to make the case for why a new tax was necessary and voters would choose to accept or reject their reasoning, Case said.

He added that it was important for voters to be able to pass the taxes within city limits, rather than on a county-wide basis, for a variety of reasons. One, Case said, was that in some counties different cities have different funding structures. In Fremont County, Riverton has more special district fees than Lander meaning that Riverton residents pay more in taxes and fees per capita than those in Lander. That might mean Riverton residents would reject an additional county-wide sales tax whereas Lander voters might accept one to fund local projects that are already paid for by fees in Riverton.

“I think municipalities should have the ability to decide their own fate and decide their own tax climate,” Case said.

The committee considered a draft bill based on one from three years ago, but members decided instead to task Case, Rep. Cathy Connolly, D-Laramie and Sen. Dave Kinskey, R-Sheridan with crafting their nwo bill ahead of the committee’s next meeting in early December

Specifically, they will seek to address the following concerns:

Ensuring that if a city raises its own sales tax that does not preclude the county from passing a county-wide measure. Currently there is a 3 percent cap on local sales taxes passed on top of the state’s 4 percent sales tax.

Allowing cities to pass a sales tax that could be used for general operations in addition to special projects.

Considering whether to allow county residents to opt-out of paying a higher sales tax when purchasing goods within municipal boundaries that cost above a certain threshold. Automobiles, for example, are currently taxed based on the residence of the buyer rather than the location of the purchase.

The revenue committee meets again on Dec. 4 and 5. If Case, Kinskey and Connolly are unable to produce a satisfactory bill by then, the topic may be brought back following the Legislature’s budget session in February.

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Arno Rosenfeld covers state politics including the Legislature and Wyoming’s D.C. delegation, focusing especially on the major issues facing the Cowboy State like economic diversification and what it means to be the most conservative state in the nation.

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