Tax studies set for interim

State needs sustaining revenues
Revenue committee will examine tax policy in 2010

By Sarah Gorin

State revenues held well enough for the Wyoming Legislature to get through the 2010 budget session without having to make drastic cuts. This may or may not be the case two years from now, mostly depending on prices for natural gas.

Wyoming’s dependence on mineral revenues exposes state and local governments to the inevitable booms and busts of the extractive industries. Our state lacks a consistent tax framework that will carry state and local government services and programs into the future on a sustainable basis.

The Equality State Policy Center, along with the Wyoming Taxpayers Association, is working hard to educate the public and lawmakers about sustainable tax policies. We hope that these will be part of the discussion when the Joint Interim Revenue Committee re-examines the wind energy tax bill that was passed, along with a one-year extension of the sales tax exemption for purchases of manufacturing equipment.

The ESPC suggested four items the interim committee should consider when studying the sales tax exemption for manufacturing equipment:

1. Other states which offer a similar exemption have other taxes — such as personal and corporate income taxes — to capture revenues if the exemption attracts new manufacturers, but Wyoming does not;
2. If the exemption benefits only existing manufacturers (as opposed to attracting new ones), then what is the rationale for giving a break to manufacturers and not other businesses?
3. The data from the reporting on the exemption suggest a substantial gender wage gap within manufacturing; and
4. Purchases of manufacturing equipment may eliminate jobs, rather than increase them.

All the tax exemptions passed in 2010 had reporting requirements, and the sales tax exemption for purchases of equipment for data processing centers also has the beginning of a “clawback” – that is, taxes will be due if the company does not produce jobs at an appropriate level.

We should note that although drastic cuts were avoided, programs and services will not be continued at previous levels due to reduced staffing and resources. Wyomingites can expect less frequent inspections, longer waits and fewer opportunities for jobs in both the public and private sectors (many private sector jobs depend on public spending for highways and construction).

A break for innovative coal power?

The Joint Interim Minerals, Business and Economic Development Committee will again consider a sales tax exemption for “Coal value added facilities.” The committee approved a bill for the just-completed Budget session. It would have included “oxy-combustion or similar advanced coal facilities” in an existing tax exemption for new coal gasification or coal liquefaction facilities. A fiscal note on the bill (SF21) indicated the inclusion would cost the state more than $25 million in lost sales tax revenues on a 150 megawatt oxy-combustion power plant.

The fiscal note apparently doomed the bill. Senate File 21 was not considered for an introduction vote.

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