"Draft Only – Approval Pending"

 

M I N U T E S

 

JOINT REVENUE INTERIM COMMITTEE

 

 

State Capitol                                                                                                                January 9, 2002

Room 302                                                                                                            Cheyenne, Wyoming

 

 

PRESENT:            Representative Pat Nagel, Cochairman;

Senator Robert Peck, Cochairman;

 

Senators Irene Devin, Dick Erb, Rae Lynn Job and Jayne Mockler;

 

Representatives Rodney "Pete" Anderson, Chris Boswell, Roy Cohee,  Roger Huckfeldt, Phil Nicholas, Doug Osborn and Jane Wostenberg.

 

Legislative Service Office:  Mark Quiner, Assistant Director; Dave Gruver, Assistant Director; Dave Nelson, Senior Research Associate; Mary Byrnes, Fiscal Analyst; and Steve Sommers, Budget/Fiscal Manager.

 

Others:  See Attachment A.

 

ABSENT:              Representative Nick Deegan.

 

*  *  *  *  *

 

Chairman Peck called the meeting to order at approximately 8:00 a.m.   The order of the meeting generally followed the prepared agenda (see Attachment B).

 

Representative Osborn moved the minutes of the previous meeting be approved.  The motion passed.

 

CREG UPDATE

 

Mr. Steve Sommers, Legislative Service Office, gave the Committee the CREG Update (see Exhibit A-1 and A-2).  Mr. Sommers indicated sales and use tax revenues are up due to the new car sales from interest refinancing offered for 2001.  He indicated that will probably decline next year.  He stated the bottom line on sales tax is a $6.8 million increase for the upcoming biennium.  

 

Mr. Sommers also explained that for severance taxes, the price of oil is down significantly from last year so CREG had to make an adjustment and lower the price from $19 a barrel to $16 a barrel.  Also, gas prices have often gone down and will probably keep going down.  The bottom line for severance taxes is a $25 million decrease.

 

For coal, a decision will have to be made regarding an expected $45 million of coal lease bonus money.

 

The common school land income fund was lowered by $3 million due to lowered investment income. 

 

Mr. Sommers also explained the fiscal profile for the upcoming biennium of 2003-2004 (see Exhibit A-2).

 

WIRELESS TELECOMMUNICATION CONSORTIUM

 

Ms. Liz Zerga, representing Western Wireless, explained the proposed draft mobile sourcing bill (see Exhibit B-1).  The bill addresses all state taxes and fees for telecommunications in response to the federal Mobile Sourcing Telecommunications Act.   That act will permit telephone service to be taxed at the main address of the user. 

 

Mr. Dan Noble, Department of Revenue, also worked with industry to resolve differences with the first bill.  He indicated the intent is to incorporate the federal act into Wyoming law to be able to tax telecommunication customers based on federal law.  Current sourcing is a nightmare for providers.  This will simplify the problem to some extent. 

 

Later in the day, Mr. Noble presented the Committee with a proposed amendment to exclude one way paging services from inclusion in the bill (see Exhibit B-2).

 

After discussion, Representative Nicholas moved the Committee adopt the bill as amended by the Department of Revenue.  The motion passed with a roll call vote of 7 ayes and 4 noes (see Exhibit B-3).

 

Senator Mockler moved the Committee sponsor the bill as a Senate File and not support the telecommunications bill previously voted as 02LSO-000212.C1 .    The motion passed with a roll call vote of 11 ayes (see Exhibit B-4).

 

INHERITANCE TAX, 02LSO-0246.W1

 

Ms. Johnnie Burton, Director, Department of Revenue, explained the bill which is in response to a federal tax change (see Exhibit C-1).

 

Ms. Burton explained Wyoming is a "pick up" state and collects inheritance tax based on the maximum state tax credit allowed under federal law.  She indicated the feds are amending their law to phase out the state tax credit allowed against federal inheritance taxes over the next four years.  This bill would enforce the federal tax law as it was on January 1, 2001.  She indicated this would result in a tax increase for Wyoming residents since they would have to pay the increase that was formerly allowed as a tax credit.

 

Mr. Chuck Harkins, a CPA from Casper, also provided testimony on the bill.  He disagrees with the Department of Revenue's interpretation and feels if Wyoming does nothing then Wyoming will collect zero dollars for the state under inheritance tax laws. 

 

After further discussion, Representative Nicholas moved the Committee sponsor the bill as a House bill.  The motion failed with a roll call vote of 3 ayes and 10 noes (see Exhibit C-2).

HOMEOWNER'S TAX CREDIT, 02LSO-0245.W1

 

Ms. Burton and Mr. Quiner explained the bill which would provide a homeowner's tax credit to those persons 65 years of age or older whose household income is 150 percent of the federal poverty level or less  (see Exhibit D-1).  Mr. Quiner also explained the amount for the fair market value of houses qualified if the tax credit was updated.

 

Mr. Buck McVeigh, Administrator of the Economic Analysis Division, Department of Administration and Information, also provided information on the population of Wyoming seniors qualifying for the federal poverty level. 

 

Following discussion, Representative Huckfeldt moved the Committee sponsor the bill as a House bill.  The motion passed with a roll call vote of 8 ayes and 5 noes (see Exhibit D-2).

 

TESTIMONY REGARDING SALES TAX

 

Mr. John Wirth, Woodworker's Supply, testified to the Committee regarding the problems he has encountered with Wyoming state agencies and the taxation of various activities by his company.  His testimony is contained in Exhibit E-1.

 

EDUCATION COMMITTEE UPDATE

 

Senator Devin provided the Committee with information on the work of the Joint Education Interim Committee.  She indicated the Committee will be sponsoring an omnibus bill request for school funding.  She was unable to give a dollar figure on the total cost since the final calculations have not been made.  She indicated the state will need $94 million to stay even with the increase granted last year in the external cost adjustment.

 

SALES AND USE TAX DISTRIBUTION-2, 02LSO-0142.W4

 

Ms. Burton explained the bill (see Exhibit F-1).  The bill changes the distribution of sales and use tax to the general fund from 72 percent to 69 percent with the remainder going to local government.  However, of the remaining share, the bill also deducts one percent to be distributed to each county in the proportion that the total population of the county bears to the total population of the state.

 

Mr. Joe Evans, Wyoming County Commissioners Association, indicated the county commissioners are in favor of this bill.  He has made presentations to the Committee over the interim regarding the need for more revenue for counties.  Mr. Evans presented the Committee with a proposed amendment to the distribution of the one percent to counties based upon a $100,000 minimum to each county with the remainder being distributed based on population (see Exhibit F-2).

 

Ms. Trudy McCracken, President of the Wyoming Association of Municipalities, indicated her organization supports the counties in this effort.  They want to be fair across the board.

 

Mr. Michael Walden-Newman, Wyoming Taxpayer's Association, testified he thinks it is a mistake to change the distribution at this time.  He does not think it will address the disparities and this is not the time to be changing the distribution.

 

Senator Job moved to adopt the proposed amendment presented by the Wyoming County Commissioners Association.  The motion failed with a roll call vote of 6 ayes and 7 noes (see Exhibit F-3).

 

Representative Cohee moved to adopt the county commissioner amendment by changing the base amount from $100,000 to $50,000.  The motion passed with a roll call vote of 9 ayes and 4 noes (see Exhibit F-4).

 

Senator Mockler moved the Committee sponsor the bill, as amended, and withdraw the previous sales and use tax distribution change bill (02LSO-0098.C1) previously adopted by the Committee for sponsorship.  The motion passed with a roll call vote of 11 ayes and 2 noes (see Exhibit F-5).

 

SALES AND USE TAX-INCREASE, 02LSO-0139.W1

 

Mr. Noble explained the bill which increased the sales and use tax rate from four percent to five percent (see Exhibit G-1). 

 

Following discussion, Representative Boswell moved the Committee incorporate all remaining seven revenue enhancement bills into one omnibus bill for sponsorship as a House bill by the Committee.  The motion passed with a roll call vote of 8 ayes and 5 noes (see Exhibit G-2).  The motion included the following bills:

 

 

The bills are attached as Exhibits G-3 through Exhibit G-8.

 

PUBLIC TESTIMONY REGARDING PROPOSED LEGISLATION

 

Mr. Marion Loomis, Wyoming Mining Association, testified his organization was against the statewide mill levy increase.  He feels that will disproportionately affect the mineral industry which also pays sales tax.  His industry would support a broad based tax increase.

 

Mr. Sleeter Dover, Director, Department of Transportation, supports the proposed increase in fuel taxes.  This would provide much needed assistance to the Department of Transportation and the highways of the state.

 

Mr. George Parks, Wyoming Association of Municipalities, made a comment regarding the willingness of local officials to support tax increases.  He stated the public revenue system in the state is the responsibility of the Legislature.  It is also the Legislature's responsibility to make sure there is adequate funding for all levels of government, including local governments.

 

Mr. Bob Tarantola, PacifiCorp, testified against the electrical generation tax. He feels the tax would make Wyoming's power industry less competitive and he is not sure if the industry could recover the tax by exporting the tax out of state. 

 

Mr. Tom Throop, Equality State Policy Center, indicated his support of the omnibus revenue bill concept.  He feels this bill will put the Committee in the best possible situation to get the bill onto the floor and give flexibility to the Legislature.

 

Mr. Brett Lindsey, Black Hills Corporation, testified against the electrical generation tax.  He feels that should be debated separately and not be placed in the omnibus revenue bill. 

 

Representative Huckfeldt feels the omnibus revenue bill may hurt the chances of introduction.  He provided the Committee with information on Wyoming's fuel taxes compared to taxes around the country (see Exhibit H-1 and H-2).

 

MOTOR HOME REGISTRATION FEES

 

Mr. Don Jackson explained the proposed bill from Representative Huckfeldt entitled Motor vehicle registration fees, 02LSO-0090.L2, and provided testimony in support of the bill (see Exhibit J-1 and J-2).  The proposed legislation would tax recreational noncommercial vehicles according to their dry weight and would result in a significant decrease of registration fees.  Following discussion, Representative Wostenberg moved the Committee sponsor the bill as a House bill.  The motion failed with a roll call vote of 6 ayes and 7 noes (see Exhibit J-3).

 

SCHOOL FINANCE-LOCAL REVENUES, 02LSO-0127

 

Mr. Dave Johnson, Wyoming Banker's Association, and several bankers testified regarding the proposed legislation and the adverse affect the bill would have upon Wyoming banks.  Those testifying included:  Mr. Mike Daly, First State Bank in Wheatland; Mr. Bob Sutter, President of Hilltop National Bank in Casper; Mr. Mike Supalla, a bank in Evanston; and Mr. Mitchell Maycock, President of First Interstate Bank of Gillette.  All of the bankers testified against the bill which would remove some state education monies from the local banks.  Mr. Lawrence Anderson, Wyoming School Boards and Administrators Association, also testified in support of the bankers.

 

Mr. Bill McIlvain, representing the Small School Coalition, indicated small schools could lose up to $100,000 according to the bill. 

 

Mr. Dave Nelson and Ms. Mary Byrnes, Legislative Service Office, provided the Committee with information on the bill and its proposed fiscal impact (see Exhibits K-1 and K-2).

 

Following extensive discussion, Senator Mocker moved the Committee obtain information from the school districts and look at the impact of the tax revenue anticipation note and meet at the first part of the legislative session and decide what to do.  Cochairman Nagel also encouraged the bankers to provide a proposed amendment to Senate File 20.  The motion passed.

 

As for the omnibus revenue bill, the Committee then requested four mills be placed in the statewide mill levy in the omnibus bill. 

 

There being no further business, the meeting was adjourned at approximately 5:00 p.m.

 

Respectfully submitted,

 

 

 

 

Senator Robert A. Peck

Cochairman

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