With Wyoming’s rosy short-term financial outlook, some say now is the time to revamp the state’s revenue and spending structure. But a key committee may have other plans.
The composition of a standing legislative committee critical to shaping Wyoming’s financial picture has taken a hard turn to the right. Four of the five members of the incoming Senate Revenue Committee have signed anti-tax pledges, made similar campaign promises to voters or spent their previous years in the body lawmaking along tax-averse lines.
That’s encouraging for someone like House Freedom Caucus Chairman, Rep. John Bear (R-Gillette), who’d like to see state government tighten its belt.
“That’s a very conservative makeup,” Bear said, while adding that “it’s a bit of a mix” on the House side where he’ll be joining the fiscal-focused committee for the first time in January. Others see the tax-averse members as being at odds with the very basis of the committee, which is largely to find new sources of money to balance the budget.
“That committee would probably be better off just not meeting because nothing will get [done],” according to economist and former Republican lawmaker Mike Madden, who spent six of his 12 years in the body as chairman of the House Revenue Committee.
It’s not just the political ideology of much of the committee that gives Madden that impression. It’s also the fact that the last year was more lucrative for Wyoming than expected, with all major state revenue streams exceeding what was estimated in early 2022. Plus, Wyoming is still flush with one-time federal dollars, mostly from the American Rescue Plan Act.
“The focus of the Revenue Committee is really based on what’s perceived as the financial condition of the state,” Madden said. “And right now the financial condition looks rosy.”
Gov. Mark Gordon has cautioned against the potentially blinding effect of that outlook, asking the Legislature to prepare for future financial challenges by putting about half of the windfall aside for savings and investments. The remaining funds should go toward a “lean budget,” according to Gordon. That kind of budget, however, has landed Wyoming in court. In August, the Wyoming Education Association sued the state for allegedly failing to adequately fund education.
This set of circumstances is not all new to Wyoming, but rather the most recent wrinkle in a long boom-and-bust history. In the not so distant past, Wyoming was bracing for its largest revenue decline in state history due to the COVID-19 pandemic and crashing oil, gas and coal activity. Even then — before mineral rebounds and stimulus funds provided a short-term infusion — the revenue committee soundly rejected a litany of tax-raising proposals. With the near-term pressure now off, however, some say current conditions are an increasingly rare opportunity to revamp the state’s revenue and spending structure.
“We don’t have to come out with a whole slew of taxes to right this ship, but we need to start thinking incrementally,” Sen. Mike Gierau (D-Jackson) said. “Because there’s no better time than right now, when you don’t feel like you’re doing stuff with a gun to your head.”
Some of those steps are in motion with the Revenue Committee, including legislation to bring property tax relief to some residents and a bill to expand Medicaid.
A cantankerous committee
Sen. Bo Biteman (R-Ranchester) will replace Sen. Cale Case (R-Lander) as Senate Revenue Committee Chairman. Before becoming chairman in 2019, Case served on the committee for 17 years. It’s a difficult committee, according to Case, who says “most people don’t want to talk about revenue in Wyoming.”
Right now soaring property taxes are driving a lot of policy at the state level, Case said, “because homeowners have seen their taxes go up, so they’re angry. They think the government has more money because they pay more taxes.”
That perception is misleading, Case said, because property taxes fund local governments. So it’s possible in any given year for the price of homes to rise, bringing up property taxes locally while the mineral revenues that fund the state go down, according to Case.
“So the [state] government gets less money but your taxes are up,” Case said. “That should tell you right there that we have a problem with our tax structure.”
Tone is also a challenge for the Revenue Committee, which Case describes as “cantankerous” and increasingly “angry in the last couple of years.”
Those tensions boiled over in August 2020 during an all-day Joint Revenue Committee meeting, according to the Wyoming Tribune Eagle, when lawmakers locked horns over how to address a projected $1.5 billion deficit. Biteman, a committee member at the time, took aim at his two chairmen — Case and Rep. Dan Zwonitzer (R-Cheyenne), the latter of which will return to the committee next year.
“To chastise members of this committee who don’t want to raise taxes and come to this job with a mandate from our voters to not raise taxes is an insult, and I’m not going to take it anymore,” Biteman said.
How Biteman will chair the committee himself remains to be seen but his record suggests an opposition to revenue-raising and revenue-diversification measures and spending. Biteman did not respond to WyoFile’s multiple requests for comment.
In 2019, Biteman was lead sponsor of a bill to cap annual spending to an amount based on inflation and population growth rates — the idea being to save enough funds during surplus times to avoid future tax increases when revenues inevitably dip. The measure was carried in mirror House and Senate bills with 16 cosponsors but neither version got far.
More recently, Biteman co-sponsored a successful bill during the 2022 budget session to decrease the coal severance tax rate from 7% to 6.5%, costing the state an estimated $10 million a year.
Biteman won’t be alone with his tax aversion. While running for the Legislature in 2020, Sen. Troy McKeown (R-Gillette), who will be joining the committee, was among several Campbell County Republicans, who signed a pledge of support for no new taxes among other things.
“I think it’s safe to say I’m still pretty much no new taxes,” McKeown said but with a caveat.
“I think if I was smart, I’d be quiet about it right now,” McKeown said. “I have some opinions but no experience with the committee, so I’d like to get my feet wet before I talk about it.”
Other new committee members Sens. Tim French (R-Powell) and Bob Ide (R-Casper) did not respond to WyoFile’s request for comment. In 2020, French told the Powell Tribune he would oppose any calls for a state income tax. More recently, he told a reporter he’s drafting a bill to assess a surcharge on electric vehicle charging stations.
“As a true conservative, I believe that taxes are overly burdensome to our citizens and business owners,” according to Ide’s campaign website. “For that reason, when you elect me as your next state senator, you can count on me to oppose any new or increased taxes or fees.”
Sen. Stephan Pappas (R-Cheyenne) is the only current committee member that will remain on the Senate Revenue Committee. He will also be the one member on the Senate side who hasn’t signed a pledge, made a campaign promise or otherwise committed himself not to increase state revenues.
“My constituents voted for me so that I can investigate and research issues and not go into any of them with a preconceived idea,” Pappas said. “There are times when new information completely changes your mind. And to already have drawn a line in the sand is, to me, not responsible.”
When it comes to Wyoming’s current fiscal outlook, Pappas is one of many lawmakers that think now is the time to do both some saving and some spending. He’ll once again support Medicaid expansion in the upcoming session, but he’d also like to see some funds go towards infrastructure, like schools and roads, he said.
Pappas sees that as a cost-saving mechanism “because putting $1 now in maintenance would save us $8 if we have to replace these structures.”
Returning House Revenue Chairman Rep. Steve Harshman (R-Casper) is optimistic about the upcoming session. Part of that comes from how much certain accounts have grown during his time in office, including the Legislative Stabilization Reserve Account — better known as the rainy day fund — and the Common School Permanent Land Fund. Harshman would like to see the state continue to grow its reserve accounts in order to be in a better position to invest in a diversified and more aggressive portfolio.
Harshman is also keen on a potential partnership with the Northern Arapaho Tribe that came up in the Joint Revenue Committee’s interim work. The Management Council tasked the committee with soliciting and investigating one or two options to provide at least $50 million in sustainable, long-term revenue for K-12 education during the interim. That’s when the Northern Arapaho Tribe approached the committee with a proposed partnership to develop class III gaming on state-owned school trust land to generate new revenue for public education.
The committee didn’t get far enough with the bill to put it up for a vote, but Harshman said he’s been working on a few draft versions of it and he may sponsor the bill. There are lots of details to work out, according to Pappas, who is also interested in the bill. Those include working with the communities — including Laramie and Uinta counties — where the casinos would draw the most out-of-staters.
“So while by no means dead, it’s not really ready for primetime,” Pappas said.
Harshman is also optimistic about the new makeup of the committee.
“I think it’s good to get some new members rolling through because it’s easy to sign that no-new taxes pledge,” Harshman said. But actual governing is a different ballgame, he said, and that can naturally encourage a change in perspective.
“There’s always more to the story and there’s a lot of expertise out there,’ Harshman said.
Speaking from experience, Harshman — the only two-term speaker of the house in Wyoming history — recalled his previous opposition to Medicaid expansion, which he voted against “probably ten times.” Now, the lawmaker sees it not only as a moral obligation — “we’re gonna save lives by doing it” — but a sound budgetary decision since it’s estimated to bring in approximately $54 million in federal dollars per biennium, according to the Wyoming Department of Health. The Joint Revenue Committee voted during the interim to sponsor the same piece of legislation from 2022 to expand the state’s Medicaid program.
Incoming Speaker of the House Rep. Albert Sommers (R-Pinedale) will determine if the bill gets assigned to the Revenue Committee, assuming it passes an introductory vote. Support from the committee will likely be mixed. Bear, for one, opposes the bill.
“I think it’s one of the largest growths of government we could see,” Bear said. “The benefits do not outweigh the risks.”
Generally, when it comes to Wyoming’s fiscal picture, Bear thinks it makes more sense to reduce the size of government, including the number of state employees. That’s his view from “30,000 feet up,” but Bear doesn’t have any particular areas where he thinks cutting government spending would be effective. And while he remains opposed to any new taxes for individuals or corporations, Bear said he would consider something like a tax on electricity as it leaves the state depending on whether it would include a rebate for residents.
“The overhead to manage such a thing,” however, gives Bear pause. “I’m not very interested in creating more bureaucracy,” Bear said.
In contrast, Case has long pushed for a tax on electricity production. The Wyoming Constitution requires that all revenue raising bills start in the House. So without a spot on the Revenue Committee and an ongoing motivation to work on Wyoming’s financial bearings, Case is looking for a House sponsor for a private bill. Case said legislative leadership have shown some support, but aren’t likely to sponsor his bill. A couple of members from the state GOP central committee — the very body that voted to censure Case in September — have been willing to talk with him about an electricity tax bill.
“Never give up, even when you’re censured,” Case said.
The 2023 general session begins on Jan. 10.