![[Top]](/images/nav-top.gif){kind=small}
![[Back]](/images/nav-back.gif){kind=small}
![[Home]](/images/nav-home.gif){kind=small}
September 24 and 25, 2003
Room 302, Capitol Building
Cheyenne, Wyoming
Senator Robert Peck, Cochairman;
Representative Roy Cohee, Cochairman;
Senators Dick Erb, Rae Lynn Job and Jayne Mockler;
Representatives Rodney "Pete" Anderson, Kurt Bucholz, Pat Childers, Lorna Johnson, Tom Lockhart, Saundra Meyer, Bill Thompson and Jane Wostenberg.
Legislative Service Office: Mark Quiner, Assistant Director and Mr. Dean Temte, Fiscal Analyst.
Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting on September 24 and Appendix 2 for those attending on September 25, 2003.
Absent
Senator Jim Anderson
All meeting materials and handouts provided to the Committee by the Legislative Service Office (LSO), public officials, lobbyists, and the public are referenced in the Meeting Materials Index, attached to the minutes. These materials are on file at the LSO and are part of the official record of the meeting.
Wednesday, September 24, 2003
Chairman Peck called the meeting to order at 8:30 a.m. Roll call was taken. The order of the meeting generally followed the prepared agenda (see Appendix 3).
Approval of Minutes
Senator Jayne Mockler moved that the minutes from the August 5 and 6, 2003, be approved as corrected. The motion passed.
Representative Cohee gave the background of the motor fuel taxation proposals from the previous legislative session, including the funding of the multi-lane highway proposal.
Mr. Sleeter Dover, Director, Department of Transportation and Kevin Hibbard, also with the Department of Transportation, provided extensive information on motor fuel taxation (see Appendix 3A). Mr. Dover indicated $15 million received by the department in severance taxes and royalties is required to go to programs that are constitutionally created. He indicated the department currently receives around $83 million in severance taxes and royalties for programs. Mr. Hibbard explained Appendix 3A and the extensive information on motor fuel taxes in Wyoming and the surrounding states.
Mr. Dover explained the current dilemma of risking funding for future highway construction projects due to Congress holding up the federal bill reauthorizing a six-year transportation funding. Following discussion, Senator Mockler moved a letter be drafted to the Congressional delegation supporting the passage of the federal bill reauthorizing federal funding for state road construction. The motion passed.
The Committee then heard testimony from Mr. George Parks, Wyoming Association of Municipalities, and other municipal officials from various towns in the state regarding the issue of fuel tax money and the need to maintain and construct streets and roadways within their municipalities. Mr. Parks provided the Committee with a municipal financial report on street expenses versus total fuel tax income (see Appendix 5). The following day Mr. Parks also provided the Committee with information on reserve monies being currently used to meet budgetary requirements including recent staff reductions by municipalities (see Appendix 6).
The Committee then heard testimony from the following people regarding municipal budgetary concerns: Lynn Whalen, Casper City Council; Ralph Glenn, Mayor of Rawlins; Jim Wells, Vice Mayor of Rawlins; Dan Blakeman, Mayor of Pine Haven; Bonnie Craft, City Manager of Laramie; Henry Rood, Mayor of Green River; and Jeff Nieters, Financial Director of the City of Green River; Mike Varney, Mayor of Torrington; and Christa West, Mayor of Chugwater (see Appendices 7 through 10).
Mr. Joe Evans, Wyoming County Commissioners Association, indicated the county commissioners are not formally asking for an increase in fuel tax at this time. However, he indicated the counties have a need for more fuel tax money due to the increasing costs of roads and streets within the counties. Mr. Evans indicated the county commissioners would like to keep the same fuel tax distribution formula.
Mr. Michael Walden-Newman, Wyoming Taxpayers Association, indicated the Department of Audit reports each year on the reserves held by local governments. He feels this would be useful information for the Committee when considering local governments' budgetary needs.
At the conclusion of the testimony for fuel taxes, Representative Cohee explained the draft he had requested on fuel taxes (See Appendix 11. Appendix 12 provides the fiscal impact of the proposed bill.) The bill would increase fuel taxes by six-cents per gallon for gasoline and diesel over a three year period. Following discussion, Senator Mockler moved the bill be drafted as a Committee bill for consideration by the Committee at its next meeting. The motion passed with a roll call vote of 11 ayes, 2 noes, 1 absent (see Appendix 13).
Chairman Peck reminded the Committee they had requested a resolution be drafted thanking Governor Stan Hathaway and the legislature for enacting the permanent Wyoming mineral trust fund. The resolution was read for the benefit of the Committee and the audience (Appendix 4).
Ms. Roberta Coates and Mr. Tom Satterfield, State Board of Equalization, provided the Committee with an update on the number of cases decided and pending which may affect the state's revenue stream (see Appendices 14 and 15).
Coal Lease Bonus Issue
Mr. Ed Schmidt, Director, Department of Revenue, and Mr. Marty Hardsocg, Attorney General's Office, provided the Committee with information on the recent Powder River Coal Company vs. Wyoming State Board of Equalization case decided in 2002. In that case, the Wyoming Supreme Court held that coal lease bonus money paid is an indirect mining cost and therefore not taxable. Mr. Schmidt indicated this decision will cost the state around $3 million per year. It has made a significant difference in how the Department of Revenue treats bonus money since the money was always considered a direct mining cost and taxed as such in the past.
Mr. Hardsocg indicated the case is bigger than it appears on its face (see Appendix 16). He explained the court went beyond just bonus payments and said if a cost has to be allocated among mining functions then these costs may be considered indirect costs and thus nontaxable.
Mr. Randy Bolles, Department of Revenue, explained 2003 House Bill 218 sponsored by Representative Floyd Esquibel. The bill added "depletion" to the direct mining costs to address the issue raised by the Powder River coal case.
Mr. Craig Grenvik, Department of Revenue, provided the Committee with the potential fiscal impact of the court decision (see Appendix 17).
Mr. Marion Loomis, Wyoming Mining Association, provided input from the mining industry's perspective on the Powder River coal case (see Appendix 18). Mr. Loomis indicated he felt the Supreme Court decision was correct in treating coal bonus money as an indirect cost since you cannot directly attribute the bonus money to mining in the pit.
Mr. Don Coovert, RAG American Coal Company, explained coal bonus money procedures and explained the history of the court case.
Mr. Greg Schaefer, Arch Coal, explained more of how the coal lease bonus bid process is conducted. The following day, Mr. Loomis provided fiscal information on the projected coal lease bonus money to be paid to the state (see Appendix 19).
Ms. Sarah Gorin, Equality State Policy Center, indicated some day the market for Wyoming coal will be reduced. She provided information on the recent coal bids in the Powder River Basin (see Appendix 20). She suggested the Committee review the revenue results from every change in tax policy. She indicated it is important first to have a fair tax policy and then adjust the rate if the fiscal results are too low.
Committee discussion on various ideas and suggestions for revenue for the upcoming budget session.
Senator Mockler indicated the GAAP accounting method should be reviewed and that statutes may need to be changed in the future to conform to the GAAP accounting method. She would also like to look at the excess surplus money being allocated to cities and counties under the formula used for de-earmarking. Mineral valuation should also be looked at again and the definition of tangible property for taxation.
Representative Bucholz indicated the issue of property taxes levied on assets of conservation districts should be considered. He also would like to explore the concept of a statewide lodging tax with credit given to jurisdictions which already levy the tax.
Senator Job indicated the Tax Reform 2000 group did good work and indicated our tax system should be restructured. This may be a good time to study the tax system since there is currently a surplus of money.
Representative Lockhart related the problem of e-business being untaxed and competing with local merchants which are taxed. He also would like to study more flexibility given to local governments to raise revenues.
Representative Meyer indicated the Committee should look to the future and possibly a state five year plan for revenue instead of doing crisis management. She would also like to look at property tax relief, mineral valuation in light of coal bed methane fiscal relief to cities and counties, and granting the Department of Revenue all the tools they need to administer a tax system, including a potentially simpler tax formula.
Representative Childers proposes looking at business taxes.
Representative Wostenberg thinks the property tax relief issue should be addressed.
Senator Erb would like to study the issue of sales tax on labor within a well site. He indicated the sales tax should be eliminated on labor services within a well site.
Representative Johnson would like to consider local government revenue needs and the potential of repealing de-earmarking. She would also like the Committee to consider property tax relief.
Representative Anderson would like to study the potential of using improvement districts for revenue sources for local governments. He also indicated the distribution of fuel taxes to counties should be reviewed, and would like to study the potential imposition of sales tax on nonhighway fuel since agriculture and railroads currently do not pay that sales tax.
Representative Thompson would also like to review de-earmarking to provide more money to local governments. He also would like to study the licensing of heavy equipment on the issue of transferring title from idle equipment to new equipment.
Representative Cohee would like the Committee to consider the issue of estate tax since the federal estate tax is being phased out.
Chairman Peck would like to review whether term limits should be revisited, and he also would like the Committee to make recommendations on how to save and spend the surplus money. Chairman Peck would also like the Committee to study an exemption for manufacturing equipment, the impact of the farm equipment sales tax exemption and tribal services received versus taxes paid. He indicated the Select Committee on Tribal Relations will be considering this topic.
The meeting was adjourned at 5:00 p.m.
Thursday, September 25, 2003
Chairman Cohee called the meeting to order at 8:30 a.m.
Tax on Railroads-Repeal, 04LSO-0090.W1
Mr. Quiner explained the bill which would remove the tax placed on railroads to be used for railroad crossings of highways (see Appendix 21).
Mr. Perry Dray, of Dray, Thomson and Dykeman, provided the Committee with information on the federal district court case which held the tax on railroads as well as the coal transport tax in violation of federal law protecting railroads from discriminatory state taxes. Following discussion, Senator Peck moved the Committee sponsor the bill. The motion passed with a roll call vote of 11 ayes, 2 noes, 1 absent (see Appendix 22).
Coal Transport Tax-Repeal, 04LSO-0091.W1
Mr. Quiner explained that the bill repeals the excise tax on the commercial transportation of coal. Following discussion, Representative Anderson moved the Committee sponsor the bill as a Committee bill. The motion passed with a roll call vote of 13 ayes, 0 noes, 1 absent (see Appendices 23 and 24).
Mr. Al Snell and Dr. Wagner, from Johnson County, explained the problem of high assessed valuations in Johnson County (see Appendix 25). Extensive testimony was received regarding the dramatic increases in assessed valuation in some of the residential areas of Johnson County.
Mr. Schmidt explained the process of appealing property tax assessments and how to have comparable sales explained by the local county assessor when a taxpayer is concerned about the level of assessment. He indicated a county assessor does have authority to change the assessment of a particular parcel of property.
Ms. Coates provided information on Johnson County's sales ratios. She indicated the county has met the state standards for acceptable assessment to sales ratios.
Ms. Brenda Arnold, Laramie County Assessor, explained the assessment process from the county assessor viewpoint. She indicated the assessor has great leeway in determining assessed value but must defend whatever an assessor does. Any change to one property may potentially affect other properties.
Mr. Walden-Newman indicated the importance of understanding the definition of "neighborhood" and how the assessor must appraise properties in relation to the neighborhood.
Business Tax
Representative Childers provided extensive information on his proposal to study a business tax for corporations doing business within the State of Wyoming. The information provided included: Wyoming corporate profits from the Internal Revenue Service (Appendix 26); State and Local Finance: How do Other States Do Things from the Wyoming Taxpayer's Association (Appendix 27); information on state income tax from the Attorney General's Office (Appendix 28); significant statutory changes affecting state taxation from LSO (Appendix 29); and successful and failed tax legislation from LSO (Appendix 30).
Following discussion by the Committee, Senator Mockler moved the LSO Research Division coordinate an effort to provide information on a potential business tax study, including information from other states which impose a business tax. LSO is to work with the Department of Revenue, the Economic Analysis Division of the Department of Administration and Information, and the Wyoming Taxpayers Association. The motion passed.
Department of Revenue Issues
Mr. Schmidt indicated there were no immediate pressing issues except for one. Mr. Schmidt would like the Committee to consider the telecommunications issues on imposing a unitary method of valuation for a company when the department has to allocate the value of the business in this state for a company which operates in several states. The issue is how to value intangibles like goodwill, licenses, etc. Mr. Schmidt indicated the definition of "intangibles" needs to be updated and it could have a potential impact on several different companies that operate in several states. Mr. Schmidt said this issue could be preliminarily addressed at the next meeting of the Committee.
Following discussion, Senator Mockler moved the definition of "intangibles" from the Department of Revenue be placed on the agenda for the next meeting. The motion passed.
Other Business
Representative Johnson would like to revisit the property tax relief proposal for the next meeting including potential draft bills. Chairman Cohee asked Representative Johnson, Senator Mockler, and County Assessor Brenda Arnold to work together on this issue.
Senator Mockler indicated netback methodologies are difficult to track and would like to have the Department of Revenue report changes in valuation to the legislature.
Representative Lockhart would like to address the road and bridge funding problem, including potential legislation. He indicated he does not have the answers, but will work with Representatives Bucholz and Thompson on this issue.
Senator Mockler moved a letter be drafted to the Joint Appropriations Interim Committee regarding de-earmarking and distribution of surplus monies. She would like the JAC to consider additional revenues from the natural gas boom for de-earmarking to be distributed to local governments. No action was taken on the motion.
Senator Peck moved an estimate be made of the coal bid bonus money with projections for the school capital construction costs. The motion passed. Senators Peck and Mockler will study this issue.
Senator Peck would like the manufactured equipment exemption to be placed on the agenda for the next meeting.
Senator Peck would also like the issue of prison construction to be placed on the agenda for the next meeting and to invite the Governor's chief of staff to discuss this topic with the Committee. Staff was directed to draft a letter to the Governor's chief of staff inviting him to attend the next Committee meeting.
Adjournment
Chairman Cohee announced the next meeting will be held November 5 and 6, 2003, in Cheyenne. There being no further business, the meeting was adjourned at 12:30 p.m.
Respectfully submitted,
Senator Robert Peck, Representative Roy Cohee
Cochairman Cochairman