M I N U T E S

JOINT REVENUE INTERIM COMMITTEE

Parkway Plaza Hotel                                                                                               July 16 and 17, 2001

Casper, Wyoming

PRESENT:            Representative Pat Nagel, Chairman;

Senator Robert Peck, Cochairman;

Senators Dick Erb, Rae Lynn Job and Jayne Mockler;

Representatives Rodney "Pete" Anderson, Chris Boswell, Roy Cohee, Nick Deegan, Roger Huckfeldt, Phil Nicholas, Doug Osborn and Jane Wostenberg (July 16 only).

Legislative Service Office:  Mark Quiner, Assistant Director and Steve Sommers, Budget/Fiscal Manager.

Others:  See Attachment A.

ABSENT:              Senator Irene Devin and Representative Jane Wostenberg (July 17 only).

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Monday

July 16, 2001

Cochairman Peck called the meeting to order at approximately 11:00 a.m.   The order of the meeting generally followed the prepared agenda (see Attachment B).

Revenue Expenditure Update

Mr. Steve Sommers, Legislative Service Office, provided information on the state revenue update (see Exhibit A-1).  Mr. Sommers generally reported the state revenue picture is ahead of all projections.  Mr. Sommers opined the state could expect to see around $40 million more in the general fund than was projected for the current year.

Historical Revenue and Expenditure Perspective

Mr. Michael Walden-Newman, Executive Director of the Wyoming Taxpayers Association, provided information on "Wyoming State and Local Finance: The Big Picture" (see Exhibit B-1) and "Wyoming State and Local Finance: Fiscal Trends" (see Exhibit B-2).  Mr. Walden-Newman explained how property taxes, including mineral production, revenue from sales, severance taxes and interest income, as well as revenue from fees and charges go into the state's coffers.  Mr. Walden-Newman also provided information on debt interest payments and administration and legal spending.  The information is based on data provided by the U.S. Census Bureau so it is several years old.

Municipal Infrastructure Needs

Mr. Dan Constantino, Director of Business and Industry Development of the Wyoming Business Council, provided the Committee with information on municipal infrastructure needs, including sewer, water, telephone, etcetera.  He indicated when businesses assess a local community for potential relocation to that community they look at what a community currently has, not what it has planned or what it may have in the future.  He explained high speed telephone lines providing high speed data services are very important.

Sales Tax Distribution Formula

Mr. Mike Mills, Mayor of Newcastle, thanked the Committee for considering the issue of sales tax distribution to local governments.  Mr. Mills and Mr. Mike Mortimer of Thermopolis explained the importance of receiving sales tax distributions for local governments.

Mr. George Parks, Wyoming Association of Municipalities, provided the Committee with information on major municipal revenue sources (see Exhibit C-1).  Mr. Parks offered options the state could pursue to raise money for cities and towns, including a state imposed property tax, a state imposed income tax and state investment income.  Mr. Parks opined cities should have a larger share of the sales tax distribution.  Mr. Parks also discussed potential funding for municipalities, including raising the severance taxes, a statewide mill levy, and increasing the local government share of sales tax distribution from 28 percent to 33 percent, as well as reallocating 10 percent of the permanent mineral trust fund interest to cities and towns.

School Capcon Interim Work

The Committee received a letter from Senator Irene Devin, Cochairman of the Select Committee on School Capital Construction (see Exhibit D-1).  The letter indicated the Select Capcon Committee is awaiting the decision of the Wyoming Supreme Court regarding school capital construction.  Once the Supreme Court renders a decision, the Capcon Committee will then be able to determine the capital construction needs of the schools in the state.

Fuel Tax Revision, 02LSO-0050.W2

Representative Huckfeldt explained the bill, which is a simplification of the fuel tax provision (see Exhibit E-1). 

After discussion, Representative Huckfeldt moved "revision" be changed to "recodification" in the catch title.  The motion failed.

Representative Osborn moved W.S. 9-4-601(h) and 39-14-211(h) be repealed instead of amended in the bill.  The motion passed.

Representative Huckfeldt moved the Committee sponsor the bill as a Senate File.  The motion passed with a roll call vote of 10 ayes and 2 noes (see Exhibit E-2).

Excise Tax Amendments, 02LSO-0067.W1

Ms. Johnnie Burton, Director of the Department of Revenue, explained the bill is the same as the Committee considered last year (2001 HB 135), but the bill does not contain any reference to ski lift tickets (see Exhibit F-1).  Following discussion, Senator Mockler moved on page 6, line 10, to strike "retains an excessive amount or who".  The motion was withdrawn.

Representative Deegan moved the municipal recreation exemption repealer be removed from Section 6 of the bill.  The motion passed.

Representative Nicholas moved the references to "business entity" be deleted and changed to "business unit", including the definitions on pages 2 and 3.  The motion was withdrawn.

Cochairman Peck moved on page 4, line 20, after "authorities" insert ","; page 5, line 17, the same amendment.  The motion passed.

Representative Nagel moved the Committee sponsor the bill as a House Bill.  The motion passed with a roll call vote of 10 ayes and 2 noes (see Exhibit F-2).

Public Input

Cochairman Peck asked if any member of the public would like to address the Committee.  There being none, the meeting was adjourned at approximately 5:00 p.m.

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Tuesday

July 17, 2001

Cochairman Nagel called the meeting to order at approximately 8:30 a.m.  The order of business generally followed the prepared agenda (see Attachment B).

Special Districts

Mr. Mike Geesey, Director, and Ms. Pam Robinson, Administrator of the Public Funds Division, Wyoming Department of Audit, presented the Committee with information on special districts (see Exhibit G-1).  They explained the reporting and auditing requirements in state law that are applicable to special districts.  Ms. Robinson explained there are currently 570 special districts in the state of which the department is aware.  This is down from 600 special districts last year.  Currently 36 special districts have over $1 million in revenue so they are required to have a CPA audit each year.  Ms. Robinson reported the total amount of revenue reported by special districts was over $462 million. 

Streamlined Sales Tax Project

Representative John Hines gave the Committee an update on the streamlined sales tax project.  The project represents an effort between the states to come up with a system for taxing Internet and out-of-state sales.  Wyoming was the first state to pass legislation regarding the streamlined sales tax project.  Now 14 states have passed some form of legislation, 2 other states have passed legislation but are waiting on their governor's approval, and 11 other states have introduced legislation to address the project (see Exhibit H-1).  Representative Hines reported the federal moratorium for states on taxing Internet sales expires this fall.  Ten to 15 bills have been introduced into Congress addressing the moratorium.  Currently, the project supports S512, a bill sponsored by Senator Dorgan of North Dakota and Senator Enzi of Wyoming, which would expand the federal moratorium four more years or until after 20 states have passed legislation. 

Representative Hines also reported Congress has passed the Mobile Telephone Communications Sourcing Act, which gives states two years to act upon it.

Electrical Generation Tax

Senator Mockler provided the Committee with information on the background of the electrical generation tax.  No bill has been drafted to address the issue this year for the Committee's consideration.  Senator Mockler explained the tax could provide the state a predicatable source of revenue of around $35 million to $40 million per year.  Senator Mockler provided the Committee with a memorandum from Don Richards of the Legislative Service Office regarding the electrical generation sales and taxes paid by the electrical industry (see Exhibit J-1).

Mr. Bob Tarantola and Mr. Jeff Larsen, PacifiCorp, testified in opposition to the electrical generation tax (see Exhibit J-2).  They explained PacifiCorp currently employees 1,400 employees.  It is a major taxpayer in Wyoming and the company paid $27.7 million last year in taxes.  The company pays property taxes in 18 counties and the electrical generation tax would drive up electrical costs for Wyoming consumers.  Mr. Larsen explained it takes quite a while to get a rate change authorized so the tax is not as flexible as one might think.

Ms. Barbara Thirstrup, Manager of Government and Public Affairs of the Black Hills Corporation, also testified in opposition to the tax (see Exhibit J-3).  Ms. Thirstrup explained imposing the electrical generation tax would further discourage the energy development which the State of Wyoming is working so hard to foster.  She feels it is unfair to single out one industry for the special tax, and that it is double taxation to tax both input (coal) and output (electricity). 

Ms. Judy Eastman, Basin Electric Power Co-op, provided the Committee with how much electricity is generated in Wyoming (see Exhibit J-4).  Ms. Eastman explained some of the tax could not be imposed on hydroelectric plants because they are government owned.  She feels electrical power plants have a huge positive impact on communities and the electrical generation tax would discourage the development of further electrical plants in this state.

Mr. Greg Schaefer, Arch Coal, gave the Committee information on all of the proposed power plants as of this date around the nation.  Wyoming currently has five proposed plants (see Exhibit J-5).  Mr. Schaefer also provided a letter from Marion Loomis, Wyoming Mining Association, opposing the tax (see Exhibit J-6). 

Mr. Larry Wolfe, representing Two Elk Project of North American Power Group as well as two of the owners of the Laramie River Station indicated he represents different groups but the cost of building any proposed plant in this state would be affected by the tax.  The tax would add considerable cost and would have an impact on any future plants planned for Wyoming.  The tax would have to be passed on to consumers and he does not feel there is a good reason to pass the tax at this time. 

After hearing the testimony and considering the issue, no action was taken by the Committee on the proposal.

Statewide Mill Levy, 01LSO-0384

Senator Mockler explained the bill would impose two mills statewide for school capital construction.  The bill was introduced by Representative Ross and Senator Cathcart last year as 2001 HB 85.  The bill did not pass.  It was explained the bill provided an option for raising money for school capital construction (see Exhibit K-1).

No action was taken on the bill.

Committee Discussion

Cochairman Peck reminded the Committee the motor home owners had testified at the previous Committee meeting objecting to the high registration cost.  He asked whether the Committee wanted to respond.  After discussion, the Committee voted not to sponsor a bill on this topic.  It was indicated individual legislators might pursue this issue on their own.

Representative Cohee asked the Committee to request a bill be drafted to increase the local government's share of sales tax distribution from 27 percent to 33 percent.  The bill should include a four-year provision, and the Legislature can revisit the subject every four years.  The Committee voted to have a bill drafted on this issue.

Representative Cohee requested the Committee have a bill be drafted to consider a one time distribution of money, over the cap, from the budget reserve account to be distributed 75 percent based on population, 25 percent to be distributed as follows:  $35,000 to each community of 50,000 people or less, with the balance equally distributed to all remaining communities.  The Committee voted not to draft such a bill.

Adjournment

Cochairman Nagel explained the next meeting will be held August 20 and 21 in Cheyenne.  At the next meeting the Committee will consider cities and towns legislation, special district legislation, what is happening with the Capital Financing Committee from Treasurer Lummis, a telecommunications tax, and background information on district reserves including what is a broadbased tax.  Cochairman Nagel indicated the meeting will start around 10:00 a.m. and end around 2:00 or 3:00 p.m. on the second day.

There being no further business, Cochairman Nagel adjourned the meeting at 1:00 p.m.

Respectfully submitted,

Senator Robert A. Peck

Cochairman