Wyoming mayors push lawmakers to consider tax options amid budget crisis

CHEYENNE – With Wyoming facing a projected $1.5 billion revenue shortfall over the next two years, a few mayors from across the state asked lawmakers Monday to start seriously considering new taxation options.

In response to the budget crisis – which emerged from long-term declines in Wyoming’s energy industries and was accelerated by the COVID-19 pandemic – the state has already cut about 10% of its state agency budgets, totaling about $250 million.

But for mayors who testified to the state Legislature’s Joint Revenue Committee on Monday, cuts alone won’t be enough.

Cody Mayor Matt Hall told lawmakers Monday that leveraging the state’s savings account was “an untenable answer to our problems,” noting the volatility of global oil markets that often dictate Wyoming’s revenue streams.

"Our leaders need to help citizens understand that revenue enhancements, or taxes, are tools we use to invest in ourselves,” Hall said. "While there is a sentiment that more cuts might seem to be necessary, those cuts will also lead to further job loss and potentially a population decline.”

Hall, who also serves as vice president of the Wyoming Association of Municipalities, drew a historical comparison to Wyoming in the mid-1920s, when Nellie Tayloe Ross was governor. Though there was discussion of passing a mineral severance tax at that time, lawmakers rejected the proposal, along with other tax options, and Hall said the state remained in an economic depression for another decade. A severance tax wasn’t ultimately passed until 1969.

“I would rather revere you as great statesmen and stateswomen, versus watch you do nothing and be regaled to the same historical fate of that 1925 Legislature,” Hall said.

Other elected leaders offered specific proposals to help the state’s ailing local governments, most of which have cut between 10% and 40% from their upcoming budgets due to the pandemic.

"I think we're seriously going to have to talk about raising the sales and use tax incrementally,” Cheyenne Mayor Marian Orr said. "But if we don't start doing it now, it's going to be more difficult in the future, from where I stand.”

Orr also mentioned removing sales tax exemptions on items such as groceries as a step that would be beneficial for local governments.

Though most tax policy remains under the purview of state legislators, the mayors also mentioned some local revenue options that could be expanded. 

Lander Mayor Monte Richardson told lawmakers that he would like to see the fifth-penny sales tax, which voters have already approved in places like Laramie County, become permanent statewide.

“Our citizens need to be responsible and pay for services that they need and they want,” Richardson said. "The only way that I feel that we can do that is by making that fifth cent a permanent tax instead of optional, which would help us move toward that sixth cent (addition)."

Richardson said the city of Lander has already cut 10 full-time positions, including ones related to street maintenance, parks upkeep and public safety.

The state’s budget shortfall could also spell the end of local government distributions from the state, which totaled $105 million divvied between counties and municipalities in its most recent budget.

During the meeting, Wyoming County Commissioners Association Executive Director Jerimiah Rieman outlined several options, from changing the sales tax distribution formula to raising some property valuations, that lawmakers could consider if the direct distributions go away.

Regardless of what options the Legislature may choose, the local leaders agreed something needs to be done. 

Sweetwater County Commissioner Randy "Doc" Wendling, who is also a WCCA board member, said his area has seen an influx of people during the COVID-19 pandemic while still being forced to cut services.

“Wyoming must diversify its tax structure for all cities, towns and counties,” Wendling said. “Our local governments provide the most basic service to constituents daily, which all of us participate in and receive. We're on the front lines of ensuring Wyoming offers a quality of life that is second to none.”

The local officials who testified maintained their willingness to work with legislators, regardless of what steps they take. But, as Hall reiterated to the committee, time is of the essence.

"I don't know how to frame it to someone what the state's going to look like if you go cut a third of the state government,” Hall said. “Trying to wrap my head around that is difficult. ... If we want to try to grow, we’re going to have to find something to replace those revenues that we’ve been reliant on for so long."