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Wyoming governor wants state to take 'realistic' look at its energy dependent tax system

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Mark Gordon

Mark Gordon speaks on the phone Dec. 17 in Cheyenne. The governor said the state needs to be "realistic and mature" about its reliance on mineral taxes on Thursday.

Wyoming needs to be “realistic and mature” about its reliance on mineral money that could, as seen recently in the case of coal, drop significantly, Gov. Mark Gordon said Thursday at a press conference.

“It’s a well-worn adage at this point that for roughly every $3,000 that a family of four pays in taxes, they get about $30,000 in … benefits, from the mineral industry,” Gordon said in response to a question about the Legislature’s recent failure to pass any action diversifying the state’s economy. “We obviously as a state have to recognize that.”

Gordon is planning on pushing awareness of the dilemma. The governor will lean on former Gov. Matt Mead’s Endow council — a group of citizens tasked with assisting the governor’s office in finding long-term solutions to Wyoming’s mineral dependent economy — to run a comparison of Wyoming’s tax structure with neighboring or “peer” states.

“I want to be able to run our current revenue streams through those tax structures so that the people of Wyoming can understand what happens if we reduce the revenue we get off coal, as we are seeing. What happens if we see volatility in the oil and gas prices?”

Depending on the year, Wyoming receives between 50 and 60 percent of its direct revenue from mineral development — largely coal, oil and gas. That reliance has locked in a boom-bust economy, with the state absorbing tremendous wealth when oil prices are strong, building schools when coal leases are robust, and then cutting aggressively into state services, like education, when the price falls.

The busts can have long-term effects. The state is still staring down a gap in education funding as a result of the downturn that hit the fossil fuel sectors in 2015. The Natrona County School District, for example, was forced to close five schools in Casper and the surrounding areas as a result.

But addressing mineral dependence has been difficult.

Near the end of his term, the former governor launched an economic diversification group to address Wyoming’s mineral reliance and the bleed of its young people to other states for work. Mead noted late last year that in forming the group, he had advised it not to simply look at taxes as a solution, which could derail support for the effort.

Economic diversification has long been a buzz word in Wyoming politics with numerous groups, task forces and departments focused on how to improve the state’s economy. But, a legislative study performed last year for the Revenue Committee noted that diversification and job creation could actually exacerbate Wyoming’s problems under the current tax structure.

Wyoming’s government services — from health to education — are largely paid by the fossil fuel industries. By adding just 100 jobs to every sector except oil and gas, Wyoming’s expenses would rapidly run ahead of its revenue, according to the report from the advisory firm REMI.

Gordon said Thursday he was disappointed that early conversations in the Legislative session on taxes reversed course by the end of the session.

The governor will not ask Endow for a recommendation on taxes, just a comparative analysis to show the numbers on Wyoming’s mineral dependence and insecurity, he said.

“That way, I think the people of Wyoming will be well-informed about what these struggles are really going to mean for the future,” Gordon said. “This gives us the opportunity to be realistic and mature about what our state’s needs are going to be going forward under different revenue scenarios.”

Follow energy reporter Heather Richards on Twitter @hroxaner


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Energy Reporter

Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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