CHEYENNE – If there was a theme to be found in the first week of the 2019 legislative session, it was this: optimism.
In comments this week, the Wyoming Legislature’s most powerful members imparted on the capital press corps a sense that 2019 would be a year of significant progress — a feeling shared by Democrats and Republicans in the Senate and House of Representatives alike.
“We share a common vision in terms of where we want the state to go,” Senate Minority Leader Chris Rothfuss, D-Laramie, said in a joint press conference Wednesday afternoon. “We all want to see the state diversify its economy, we want to see diversified revenue, we all want the people of Wyoming to be safe, secure and healthy, to have good jobs, good lives. This common objective we have is the foundation we’re going to build our legislation on.”
“That said,” he added. “There are some details that lack specificity.”
Though both sides said they felt much could be accomplished on a number of fronts, numerous areas remain without suitable bipartisan solutions in week one. Education funding remains a long game, with a sustainable solution after years of heavy budget cuts still a matter of piecemeal policy. A picture of a “Wyoming-based solution” to health care, with the prospect of Medicaid expansion all but off the table, has remained fuzzy at best, with some bills out in the open while others remain on the drafting table, awaiting their introduction.
As legislators filed out of Jonah Business Center to return to their districts Friday afternoon, there seemed to be consensus on one area of policy, however, that may see some significant ground made over the next seven weeks: the stabilization of the state’s balance sheet, which for decades has been prone to the ups and downs of the state’s volatile energy sector.
There remains, however, a disagreement on how to get there. While both Democrats and Republicans generally agree that a “broadening” of the tax base needs to occur, Democrats have concerns that the Republican leadership’s desire to remain revenue-neutral while doing so — achieved by introducing a lower tax rate — will only create long-term problems, and that the state’s revenue concerns need to be addressed through a broader set of solutions.
“We need to broaden our tax base,” Rothfuss said. “But we can’t just remain revenue neutral in the long run. That leads to expenditures from our savings for too long of a drawdown. We have to have serious and realistic conversations about new forms of revenue: not just diversifying and lowering it but new forms of revenue that can pay our bills in the future, not just relying on our savings today.”
The leadership’s vision
In his opening speech to the House of Representatives on Tuesday, Speaker of the House Steve Harshman, R-Casper, made clear as he has in past years that alternative sources of revenue were the key to solving the state’s budget woes, rather than relying on further cuts to the state’s budget to make ends meet.
Harshman and his ally in the Senate, Senate President Drew Perkins, R-Casper, share similar visions for “modernizing” the state’s revenue streams. That includes finding a “fair balance” for taxing wind and solar, raising revenues through lodging taxes and other areas of the sales tax, and offsetting several programs — like the state’s Office of Tourism and its Department of Transportation — from the state’s general fund. Instead, those programs would be financed through other means like a gasoline tax, which would be indexed to inflation.
The leadership’s plans, while expected to broaden the state’s tax base and ease the burden on the state general fund, are not intended to turn a profit, however. They include plans to lower the state’s tax rate, resulting in what leadership has described as a “revenue neutral” broadening that reflects the state’s changing economy. Alternative energy, like wind and solar, is becoming cheaper, for example, and can now be taxed at a rate that won’t hurt continued development. More than 80 percent of the traffic on Wyoming’s roads comes from out-of-state, inspiring Wyoming to try to get the people using those roads the most to pay more of a share of the maintenance.
The question of a reduced tax rate, however, is an uncertainty. When asked if he was concerned about a steep drop-off in revenues from such a move, Harshman said he believed that a combination of new revenues from a broadening of the tax base would eliminate any losses. It might, in fact, result in a benefit for Wyoming residents in the form of lower taxes, even if they were paying tax on more items and services, Harshman said. He named recent examples seen in the Dakotas, which tried something similar, and gave the example of the state’s internet sales tax as recent examples of where the estimates matched the results.
“We’re building in Wyoming, we’re not going backwards, and we can continue to modernize our taxes,” Harshman said in a Friday morning conference with reporters. “That’s what conservative people do — we pay our bills in this state and we’re proud of that. By lowering that rate and keeping it to where we’re revenue-neutral, as Wyoming continues to evolve and change (the state’s balance sheet) will respond to that. If people in Wyoming keep track of their sales tax, I think it will actually be a reduction for most people, or pretty neutral.”
Democrats, however, think more can be done. House Minority Leader Cathy Connolly, D-Laramie, said she wanted to open the conversation of how powerful other revenue streams — like an income tax — could be on the state’s bottom line.
Though Republicans have made it clear that such a prospect is completely off the table, Connolly said it was important to at least broach the conversation and to “simply have the discussion and understand what a modest income tax would look like for individuals as well as corporations.”