Touted tax ‘modernizing’ effort staggers in week three

By Andrew Graham,

Despite the early endorsement of Republican leadership, property and sales tax bills appear dead in the water at the end of the third week of the 2019 legislative session.
Speaker of the House Steve Harshman (R-Casper) and Senate President Drew Perkins (R-Casper) entered the session saying they supported an effort to broaden the state’s sales tax. They wanted to “modernize” the tax to cover many previously untaxed services, remove some exemptions, including groceries, while also lowering the sales tax rate by a half percent.
Harshman also said he wanted to see debate on a bill to raise property taxes for public education.
But for three weeks, the sales tax bill sat in committee without a public hearing and the property tax bill was not assigned to any committee. By Friday morning it seemed both efforts were aground.
House Bill 67 – Sales tax revisions sought to raise money for local governments by broadening the sales tax to include a host of previously exempted products and untaxed services. To make the bill more palatable to the tax-wary Wyoming Legislature, the bill also lowered the overall sales tax rate by a half percent.
But in a Friday morning news conference, Harshman said the bill may not get a public hearing this session because there is little appetite for it on the House floor.
House Bill 68 – School funding revenue, which would raise property taxes to fund education, probably won’t be assigned to a committee either, Harshman said. Sponsored by the Joint Revenue Committee, HB68 would have raised $68 million a year for public schools by 2022.
“I just don’t think we’re there,” the speaker said.
Death of a sales tax
Prior to the session, Perkins and Harshman both backed the sales tax initiative, calling it an effort to “modernize” the state’s tax structure in order to collect revenues from the diversified economy Wyoming policy makers seek to build. They pitched the bill as “broadening and lowering”  the sales tax, as opposed to a mere tax increase.
House Bill 67 would have raised $33 million a year for local governments by removing exemptions on the purchase of food, manufacturing equipment and equipment for data processing centers.

Harshman assigned the bill to the House Appropriations Committee, whose chairman, Bob Nicholas (R-Cheyenne), is an ally of the speaker. The bill was set for a hearing the evening of Jan. 22, but Nicholas tabled its discussion.
The bill was not put back on the committee’s schedule, and discussions moved behind closed doors and into huddled off-record conversations on chamber floors, out of public hearing.
Through a spokesperson for the Republican caucus, Nicholas declined to comment on the bill’s status on Thursday. On Friday, Harshman didn’t completely rule out a hearing on the bill, but said it seemed unlikely as its supporters struggled to rally the votes they would need on the House floor or in the Senate.
“I think the committee is still kinda pondering and working it,” Harshman said. “I don’t know if the bill’s going to make it, to be honest with you, or if they’re even going to take it up.”  
On the Senate side, Perkins said senators had expressed disinterest in the bill in closed-door Republican caucus.
“I know where enough people stand that I don’t think it will pass,” Perkins said. “It’s only fair to let the House know so they don’t have to have that battle just to have it come down here and fail.”
Without public discussion, it’s not clear what made the bill unpalatable for lawmakers despite leadership’s support. The Senate wouldn’t back the bill without the provision lowering the sales tax from 4 to 3.5 percent, which the bill currently includes, Perkins said.
“If it doesn’t lower, then I think it’s simply a tax raising bill,” Perkins said.
If House proponents had sought to push the bill without that provision, the suggestion was made behind closed doors. Another House Appropriations Committee member, Rep. Tom Walters (R-Casper), told WyoFile he didn’t know what was being done with the bill on Thursday, suggesting Nicholas was running the bill.
Harshman implied that the number of previously untaxed services — and therefore constituencies — that would have faced a sales tax under the bill doomed it. “You’re trying to bring in 60, 70, 80 more services,” he said, “you’ve probably got 60, 70, 80 more no votes.”
With no evident appetite for the bill on the House floor, Harshman said, you might as well table the topic for study during the period between sessions.
“You spend all your time on something that maybe we can just work on in the interim,” he said.
The sales tax bill was sponsored by the Joint Revenue Committee, which studied the topic during the last interim. That committee also sponsored the property tax bill.

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