Democracy and special excise taxes

Buchanan bill lifts majority rule on 'specific purpose' tax

By Sarah Gorin

Although the bill attracted no press attention, interesting exchanges took place when the House Revenue Committee and subsequently the full House considered HB 115 Specific purpose excise tax – voter petition.

Wyoming law currently allows local governments to seek voter approval to impose excise (sales and use) taxes on top of the statewide 4% sales tax. Additional pennies may be designated for general revenue, lodging, specific purposes, and/or economic development, up to an additional three cents.

Proposed sales taxes are put on the ballot by the governing authority of a county – the county commissioners – in agreement with at least two-thirds of the incorporated municipalities within the county. As noted above, any additional tax requires approval from a majority of voters before it can go into effect.

The requirement for the two-thirds agreement effectively gives smaller municipalities within a county a way to ensure that they get some of the money. For example, in Albany County, the county commissioners have to cut a deal with the City of Laramie (where most county residents live) and the Town of Rock River (population approximately 200) to get a tax proposal on the ballot.

Looking at it another way, smaller municipalities – a minority of the county population – hold veto power over the majority of county residents.

This weighting of power to a minority over the majority probably is constitutionally questionable, and it came into focus in the debate over HB 115, brought by Torrington Republican Ed Buchanan and co-sponsored by 10 other legislators (see below).

In all the above cases except the specific purpose tax, a tax proposal can be brought to the ballot not only by the agreement of the local governments, but also by petition of 5% of the voters within a county. Buchanan’s bill simply adds the petitioning option to the specific purpose tax.

The first question asked was whether the petitioning provision would enable proponents of an additional tax to “get around” the required agreement of the local governments. Rep. Buchanan admitted that it would, but pointed out that this already is the case with the other three taxes and, of course, the proposed tax still would have to be approved by a majority of voters.

That response carried the bill through committee and then the House of Representatives (barely), but a number of lawmakers clearly were uncomfortable with anything that might deny the small municipalities their veto power.

Our representative government at both the national and state levels is based on the concept of majority rule with protection of minority rights. Extra scrutiny of the use of governmental taxation power is justified. But we also must maintain the fundamental commitment to democracy and citizen participation.

HB 115 specific purpose excise tax – voter petition
Sponsor: Rep. Ed Buchanan (R-H4, Torrington); co-sponsors Reps. Seth Carson (D-H45, Laramie); Pete Illoway (R-H42, Cheyenne); Lori Millin (D-H8, Cheyenne); Bryan Pedersen (R-H7, Cheyenne); Matt Teeters (R-H5, Lingle); Mary Throne (D-H11, Cheyenne); and Sens. Bruce Burns (R-S21, Sheridan); Marty Martin (D-S12, Rock Springs); Curt Meier (R-S3, LaGrange); Tony Ross (R-S4, Cheyenne)

Passed the House 2/22/10 with 33 ayes, 24 noes, 3 excused

Sarah Gorin conducts policy research and lobbies the Wyoming Legislature for the ESPC.