Tuesday, December 8, 2009

Power generation tax fails

Bill to diversify tax base runs aground

This is Part II of an ESPC analysis of state tax policies and policy proposals and their potential effect on the Wyoming economy

By Sarah Gorin
ESPC researcher

At its November meeting, the Joint Interim Revenue Committee deadlocked on bringing forward (as a committee bill) an electrical generation tax. The members’ votes are listed below.

A joint committee is comprised of the same standing committee from each house of the Legislature – in this case, the Revenue Committees from the Wyoming House of Representatives and the Wyoming Senate. According to the joint committee’s policy, a majority of both the House and Senate committees must vote for sponsoring a bill as a committee bill, on the grounds they want to know it will pass each committee during the legislative session.

The designation as a committee bill is important because these get preference during the short and busy legislative sessions, when many bills will fall by the wayside.

As proposed, the bill — sponsored by Sen. John Schiffer (R-S22, Kaycee) — levied a .0025 cent tax on each kilowatt hour (or portion thereof), produced in Wyoming. The bill also provided a credit of .00087 cents per kilowatt hour for electricity generated from sources upon which a severance tax was paid (i.e., fossil fuels).

In other words, the full tax would be paid on electricity generated from wind or other non-fossil sources.

While this might seem counterproductive from a planetary viewpoint, the idea is to broaden Wyoming’s tax base to include alternative energy sources in a future less dependent on fossil fuels, which currently generate a large part of Wyoming’s tax revenues. It also provides a way to collect revenues from ratepayers in other states whose renewable portfolio standards are driving much of the wind generation being built in Wyoming.

Anticipated revenues from an electrical generation tax were not discussed in any detail. However, given the level of electrical production in Wyoming, it appears that the tax minus the credit might amount to approximately $50 million annually.

The defeat of the electrical generation tax as a committee bill does not preclude a legislator (or legislators) from bringing the bill individually.

The bill failed as a committee bill on a tie vote, 4-4 on the House side and 2-2 on the Senate side. Reps. Ken Esquibel (D-HD41, Cheyenne), Mike Madden (R-HD40, Buffalo), Owen Petersen (R-HD19, Mountain View), and Patrick Goggles (D-HD33, Ethete) voted for the bill, while Reps. Amy Edmonds (R-HD12, Cheyenne), Mark Semlek (R-HD1, Moorcroft), Sue Wallis (R-HD52, Recluse) and Pete Anderson (R-HD10, Pine Bluffs) voted against it. On the Senate side, Sens. Schiffer, Cale Case (R-SD25, Lander) voted for the bill, and Sens. Marty Martin (D-SD12, Superior) and Drew Perkins (R-SD29, Casper) voted no.

Sen. Grant Larson (R-SD17, Jackson) and Rep. Dave Miller (R-HD55, Riverton) were not present for the vote.

Part III, Manufacturing Tax Exemption & Gender Wage Gap
Part IV, The Jobs Budget