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.
Next:
Part III, Manufacturing Tax Exemption & Gender Wage Gap
Part IV, The Jobs Budget
Showing posts with label Joint Revenue Committee. Show all posts
Showing posts with label Joint Revenue Committee. Show all posts
Tuesday, December 8, 2009
Wednesday, November 25, 2009
Taxes and Jobs
Tax expenditures erode state revenue
This is Part I of an ESPC analysis of state tax policies and how they affect the health of Wyoming's economy
By Sarah Gorin
ESPC researcher
Low levels for natural gas prices continue to drag down projections for state revenues. The Governor’s 10% across-the-board budget cut from last summer has freed up funds for the coming legislative budget session that will meet in February 2010, but many legislators fear that there may be worse to come.
Despite years of hand-wringing over the boom-and-bust nature of Wyoming’s economy – and the consequent boom-and-bust effect on state revenues – very little has been done to stabilize revenues for budget purposes. The Legislature has set up “rainy day” accounts to set aside funds during boom times to spend in bust times, but not enough has been saved. For example, spending can be continued at the same level as the 2009-2010 biennium only by completely wiping out the rainy day accounts.
The state is then left with two alternatives: cut spending or raise taxes. Many legislators apparently prefer the former, as shown by the Joint Interim Revenue Committee actions at its meeting last week, when all revenue-raising bills offered were voted down (with the exception of a tax increment financing bill for municipalities).
However, there is more than one way to cut spending. Spending occurs through direct state expenditures and also through “tax expenditures” – tax not collected due to tax exemptions (for example, the sales tax exemption for purchases of manufacturing equipment) or tax exclusions (for example, sales of services are not exempt from Wyoming’s sales tax, they simply are not taxed).
Wyoming’s statutes are rife with numerous sales and property tax exemptions, and because we have no tax expenditure reporting, legislators and the public have no idea how much revenue is being lost. If, during the course of the two-day revenue committee hearing, the state had collected a million bucks for every time a state agency or a lobbyist answered “I don’t know” in response to a question about quantifying a tax exemption, we’d be well on the way to meeting next year’s budget.
That’s why it was particularly disappointing to witness the demise of a bill to repeal property tax exemptions for pollution control and fire protection equipment. We actually do have a figure for the cost of the pollution control exemption – about $15 million a year – because county assessors have to report it.
The exemption for pollution control equipment is an artifact left over from the time forty years ago when pollution controls were a new and different thing. Now, they are simply a cost of doing business.
The utility lobbyists were all over the pollution control bill, however, saying that the exemption still provides an “incentive” to comply - as if compliance wasn’t required by state and federal laws - and, if the exemption is repealed, the cost of the tax would fall on Wyoming consumers.
Most electric power generated in Wyoming is exported to other states, and the costs of generating that power are allocated to all ratepayers, not just those in Wyoming. A repeal of the tax exemption on pollution controls would mean that the cost of the tax would be similarly allocated, with a relatively small portion passed on to Wyoming ratepayers.
Right now, because Wyoming residents bear the full brunt of the tax exemption in terms of tax revenues not received by local governments (property taxes mostly go toward supporting public education), they are subsidizing ratepayers in other states for the costs of pollution control. Go figure.
A good way to start getting a handle on state spending via tax expenditures would be to require tax expenditure reporting. If we knew what the tax exemption for fire protection equipment, for example, costs us, we could better decide if it is worth it.
Next:
Part II, Electrical Generation Revenues
Part III, Manufacturing Tax Exemption & Gender Wage Gap
Part IV, The Jobs Budget
This is Part I of an ESPC analysis of state tax policies and how they affect the health of Wyoming's economy
By Sarah Gorin
ESPC researcher
Low levels for natural gas prices continue to drag down projections for state revenues. The Governor’s 10% across-the-board budget cut from last summer has freed up funds for the coming legislative budget session that will meet in February 2010, but many legislators fear that there may be worse to come.
Despite years of hand-wringing over the boom-and-bust nature of Wyoming’s economy – and the consequent boom-and-bust effect on state revenues – very little has been done to stabilize revenues for budget purposes. The Legislature has set up “rainy day” accounts to set aside funds during boom times to spend in bust times, but not enough has been saved. For example, spending can be continued at the same level as the 2009-2010 biennium only by completely wiping out the rainy day accounts.
The state is then left with two alternatives: cut spending or raise taxes. Many legislators apparently prefer the former, as shown by the Joint Interim Revenue Committee actions at its meeting last week, when all revenue-raising bills offered were voted down (with the exception of a tax increment financing bill for municipalities).
However, there is more than one way to cut spending. Spending occurs through direct state expenditures and also through “tax expenditures” – tax not collected due to tax exemptions (for example, the sales tax exemption for purchases of manufacturing equipment) or tax exclusions (for example, sales of services are not exempt from Wyoming’s sales tax, they simply are not taxed).
Wyoming’s statutes are rife with numerous sales and property tax exemptions, and because we have no tax expenditure reporting, legislators and the public have no idea how much revenue is being lost. If, during the course of the two-day revenue committee hearing, the state had collected a million bucks for every time a state agency or a lobbyist answered “I don’t know” in response to a question about quantifying a tax exemption, we’d be well on the way to meeting next year’s budget.
That’s why it was particularly disappointing to witness the demise of a bill to repeal property tax exemptions for pollution control and fire protection equipment. We actually do have a figure for the cost of the pollution control exemption – about $15 million a year – because county assessors have to report it.
The exemption for pollution control equipment is an artifact left over from the time forty years ago when pollution controls were a new and different thing. Now, they are simply a cost of doing business.
The utility lobbyists were all over the pollution control bill, however, saying that the exemption still provides an “incentive” to comply - as if compliance wasn’t required by state and federal laws - and, if the exemption is repealed, the cost of the tax would fall on Wyoming consumers.
Most electric power generated in Wyoming is exported to other states, and the costs of generating that power are allocated to all ratepayers, not just those in Wyoming. A repeal of the tax exemption on pollution controls would mean that the cost of the tax would be similarly allocated, with a relatively small portion passed on to Wyoming ratepayers.
Right now, because Wyoming residents bear the full brunt of the tax exemption in terms of tax revenues not received by local governments (property taxes mostly go toward supporting public education), they are subsidizing ratepayers in other states for the costs of pollution control. Go figure.
A good way to start getting a handle on state spending via tax expenditures would be to require tax expenditure reporting. If we knew what the tax exemption for fire protection equipment, for example, costs us, we could better decide if it is worth it.
Next:
Part II, Electrical Generation Revenues
Part III, Manufacturing Tax Exemption & Gender Wage Gap
Part IV, The Jobs Budget
Wednesday, July 29, 2009
Tax committee attracts big crowd
What to do about revenues in a declining economy
It was standing room only at Tuesday’s meeting of the Interim Joint Revenue Committee in Cheyenne. Topic: What to do about state revenues in the face of a declining economy.
While there was no shortage of lobbyists, there was a shortage of good data for the committee to work with.
Sarah Gorin of the Equality State Policy Center and Erin Taylor of the Wyoming Taxpayers Association opened the day with a presentation on sustainable tax policy. One item they suggested – the creation of a tax expenditure report (which would show revenues the state is missing due to tax exemptions and exclusions) generated some interest from members of the committee.
It turned out in a subsequent presentation from the Department of Revenue that the Department had begun efforts to quantify revenues lost from tax exemptions. Unfortunately, the data were woefully incomplete, mainly because taxpayers don’t have to apply for tax exemptions – they simply don’t pay. Consequently, it’s very difficult to collect data that doesn’t have to be reported in any way, especially if (as in this case) county governments are involved as well as the state.
Good data are essential to good decision-making. We constantly hear that government should be “run more like a business,” and no business would make decisions involving millions of dollars without any data. Although there is reluctance to spend more while revenues are down, investing in a state employee or whatever it takes to accurately collect and analyze relevant data to inform legislative decisionmaking would be a good move. Wyoming taxpayers deserve it.
Two committee members asked the Legislative Service Office to draft bills to remove tax exemptions for some industry operations and property, according to reporting by Joan Barron of the Casper Star-Tribune.
Rep. Mike Madden of Buffalo wants to eliminate tax exemptions granted industry for underground mining equipment, pollution control equipment and fire protection, the story reported.
But Sen. Cale Case of Lander disputed the report that he seeks to eliminate tax exemptions for private schools, charitable and religious organizations and fraternal organizations.
Sen. Case said he asked for a bill that would require an annual application process to qualify for property exemptions for religious entities, non-profits and private schools. He believes the process would generate useful data about the exemptions.
"This is an effort to consistently determine the impact and appropriateness of the tax exemption for entities that have a broad range of activities and property interests -- some of which should properly be taxed," Sen. Case wrote in an email message. Examples of these "mixed entities" include churches that have taxable rental property or schools that operate a retail store open to the public.
"I am not aware of any member of the revenue committee suggesting that the property tax exemption for these entities be removed," Sen. Case wrote.
Colorado TABOR evangelist offers 'help'
Independence Institute economist Barry Poulson, an evangelical proponent of Colorado’s Taxpayer Bill of Rights known as TABOR, laid out his vision for limiting state government before the committee Tuesday afternoon. Barron reported Poulson's presentation in Wednesday's Star.
One hopes that the members of the Joint Revenue Committee will talk with their legislative colleagues in Colorado to learn how that piece of reactionary 1990s anti-government activism has adversely affected public schools, higher education, road maintenance, fire and police protection and other basic services.
Many of the state’s business and community leaders view TABOR as deeply flawed, limiting the Colorado’s ability to invest in its own future.
TABOR applies to all levels of government, from weed and pest districts to the state legislature. It limits tax increases to a formula based on population increase and the consumer inflation rate.
That might work if everything stayed the same in the world. But Colorado in the 1990s was a young state. Its demographics have changed with the aging Boomer population. Health care costs have gone up at a much higher rate than the consumer price index.
Parents with children in some rural public schools have been forced to hold fund-raisers to buy text books and other school essentials.
Things got so bad in Colorado that voters in 2005 approved a referendum to loosen the strict spending limits TABOR imposes for five years. Even with that, Colorado faces a troubling future. As in Wyoming, revenues have declined, continuing to erode the state’s ability to deliver essential services. Some economists there predict that general fund revenues will not return to 2007 levels even by the end of 2012-13.
Sarah Gorin contributed to this post.
It was standing room only at Tuesday’s meeting of the Interim Joint Revenue Committee in Cheyenne. Topic: What to do about state revenues in the face of a declining economy.
While there was no shortage of lobbyists, there was a shortage of good data for the committee to work with.
Sarah Gorin of the Equality State Policy Center and Erin Taylor of the Wyoming Taxpayers Association opened the day with a presentation on sustainable tax policy. One item they suggested – the creation of a tax expenditure report (which would show revenues the state is missing due to tax exemptions and exclusions) generated some interest from members of the committee.
It turned out in a subsequent presentation from the Department of Revenue that the Department had begun efforts to quantify revenues lost from tax exemptions. Unfortunately, the data were woefully incomplete, mainly because taxpayers don’t have to apply for tax exemptions – they simply don’t pay. Consequently, it’s very difficult to collect data that doesn’t have to be reported in any way, especially if (as in this case) county governments are involved as well as the state.
Good data are essential to good decision-making. We constantly hear that government should be “run more like a business,” and no business would make decisions involving millions of dollars without any data. Although there is reluctance to spend more while revenues are down, investing in a state employee or whatever it takes to accurately collect and analyze relevant data to inform legislative decisionmaking would be a good move. Wyoming taxpayers deserve it.
Two committee members asked the Legislative Service Office to draft bills to remove tax exemptions for some industry operations and property, according to reporting by Joan Barron of the Casper Star-Tribune.
Rep. Mike Madden of Buffalo wants to eliminate tax exemptions granted industry for underground mining equipment, pollution control equipment and fire protection, the story reported.
But Sen. Cale Case of Lander disputed the report that he seeks to eliminate tax exemptions for private schools, charitable and religious organizations and fraternal organizations.
Sen. Case said he asked for a bill that would require an annual application process to qualify for property exemptions for religious entities, non-profits and private schools. He believes the process would generate useful data about the exemptions.
"This is an effort to consistently determine the impact and appropriateness of the tax exemption for entities that have a broad range of activities and property interests -- some of which should properly be taxed," Sen. Case wrote in an email message. Examples of these "mixed entities" include churches that have taxable rental property or schools that operate a retail store open to the public.
"I am not aware of any member of the revenue committee suggesting that the property tax exemption for these entities be removed," Sen. Case wrote.
Colorado TABOR evangelist offers 'help'
Independence Institute economist Barry Poulson, an evangelical proponent of Colorado’s Taxpayer Bill of Rights known as TABOR, laid out his vision for limiting state government before the committee Tuesday afternoon. Barron reported Poulson's presentation in Wednesday's Star.
One hopes that the members of the Joint Revenue Committee will talk with their legislative colleagues in Colorado to learn how that piece of reactionary 1990s anti-government activism has adversely affected public schools, higher education, road maintenance, fire and police protection and other basic services.
Many of the state’s business and community leaders view TABOR as deeply flawed, limiting the Colorado’s ability to invest in its own future.
TABOR applies to all levels of government, from weed and pest districts to the state legislature. It limits tax increases to a formula based on population increase and the consumer inflation rate.
That might work if everything stayed the same in the world. But Colorado in the 1990s was a young state. Its demographics have changed with the aging Boomer population. Health care costs have gone up at a much higher rate than the consumer price index.
Parents with children in some rural public schools have been forced to hold fund-raisers to buy text books and other school essentials.
Things got so bad in Colorado that voters in 2005 approved a referendum to loosen the strict spending limits TABOR imposes for five years. Even with that, Colorado faces a troubling future. As in Wyoming, revenues have declined, continuing to erode the state’s ability to deliver essential services. Some economists there predict that general fund revenues will not return to 2007 levels even by the end of 2012-13.
Sarah Gorin contributed to this post.
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