M I N U T E S

JOINT REVENUE INTERIM COMMITTEE

State Capitol                                                                                                       August 20 and 21, 2001

Room 302                                                                                                               Cheyenne, Wyoming

PRESENT:            Representative Pat Nagel, Cochairman;

Senator Robert Peck, Cochairman;

Senators Irene Devin, Dick Erb and Jayne Mockler (August 20 only);

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

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

Others:  See Attachment A (August 20) and Attachment B (August 21).

ABSENT:              Senators Rae Lynn Job and  Jayne Mockler (August 21) and Representative Phil Nicholas.

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Monday

August 20, 2001

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

WYOMING TAX SWAP

Mr. Brett Glass, a Laramie small businessman, gave a presentation to the Committee on the Wyoming tax swap (see Exhibit A-1).  Mr. Glass wrote the paper for Alan Simpson's class that was taught at the University of Wyoming.  Mr. Glass' premise is that if Wyoming had lower taxes, fewer taxes, fairer taxes, and still had job growth and economic stimulation the state would be better off.  Mr. Glass indicated the Wyoming tax swap proposes the replacement of sales tax, use tax and business personal property tax with a flat rate personal income tax and corporate income tax.  He estimates the income tax rate would be around three percent.

EXECUTIVE SESSION

The Committee resolved itself into Executive Session to hear a discussion from Ray Hunkins, Counsel for the state in the school finance litigation.

CYNTHIA LUMMIS, STATE TREASURER

Ms. Lummis provided the Committee with the CREG monthly report (see Exhibit B-1), as well as the current profile of the Wyoming state total fund investment performance (see Exhibit B-2).  Ms. Lummis indicated the total return on the year's investments of $3.9 billion is 8.43 percent thus far this year. 

Ms. Lummis further indicated the State Building Commission has retained the services of Keith Curry from Newport Beach.  Mr. Curry also works with the RTD in Denver and the City of Los Angeles as their investment advisor.   Mr. Curry will be working with the State Building Commission to develop a menu of options based on his discussions with the Legislative Service Office, the Department of Education, the Department of Transportation, and the University of Wyoming related to the capital construction needs for schools in this state.  Mr. Curry will also be working with the Select Committee on Capital Financing and Investments at their October meeting.

COUNTY REVENUE AND FINANCE

Mr. Joe Evans, Executive Director of the Wyoming County Commissioners Association, and Ms. Debbie Lathrop, Laramie County Treasurer and president of the Wyoming County Treasurer's Association, gave a presentation to the Committee on county revenue and finance (see Exhibit C-1).  Mr. Evans indicated that while statewide population has increased 8.14 percent in the last 10 years, county employment has increased 6.25 percent during that same period.  He indicated 18 out of 23 counties currently impose the 5th penny general purpose tax, and approximately one-half of the counties have used the specific purpose/capital facilities tax.  Ms. Lathrop indicated the need for the state to consider the revision of fees that are allowed to be charged for different services.  She indicated the cost of providing a service varied from one county to the next.  Proposed solutions were presented to the Committee (see Exhibit C-1).

Ms. Donna Ruffing, Niobrara County Commissioner, presented the Committee with information on payment in lieu of taxes (PILT) monies counties receive on state lands (see Exhibit C-2).    Ms. Ruffing suggested the Committee review the information as a possible method of funding counties.  Ms. Ruffing proposed changes to the way PILT monies are figured and distributed.  Ms. Ruffing also indicated support for the real estate transfer tax.

Ms. Sandy Shuptrine, Teton County Commissioner, provided the Committee with an outline of priority revenue-related interests for Teton County (see Exhibit C-3).  Such interest included property tax relief for permanent residents and those on fixed incomes, real estate transfer fee, and more flexibility for local governments to meet local needs.

Ms. Marilyn Connolly, Johnson County Commissioner, indicated Johnson County is seeing people move from Jackson to Johnson County.  They have the same problem as Teton County with rising residential costs except on a smaller scale.  Johnson County currently is experiencing coalbed methane related issues, and Ms. Connolly indicated all money received from coalbed methane will go out and will cost the county more in extra personnel for additional needed services.

Mr. Tom Satterfield, Fremont County Commissioner, indicated the state should look at not only the past 10 years of the growth period, but a longer term to indicate proper trends.  He indicated Fremont County is not eligible for the impact tax since they have not imposed the 5th penny sales tax even though they have tried two separate times.  He feels the state should eliminate this requirement.

Mr. Stan Cooper, Lincoln County Commissioner, indicated that federal revenues counties are receiving are being reduced while populations are increasing.  He liked the Tax Reform 2000 Report and the County Revenue Expense Report done by the state.

Ms. Alberta Montz, Goshen County Commissioner, indicated Goshen County is mapping the county.  They did not have money for the project so they took money from the road and bridge fund.  They also obtained a $20,000 matching amount from the State Land and Investment Board.  She indicated there are seven counties with an assessed valuation under $100 million and they have a tough time coming up with matching money for state loans.

HOMESTEAD EXEMPTION

Ms. Johnnie Burton, Director of the Department of Revenue, explained the homestead exemption.  She indicated that to fund the homestead exemption in its current form would cost about $3 million.  If the guideline were increased for homes with a fair market value of $60,000 to $100,000, then it would cost the state around $12 million per year to fund the homestead exemption (see Exhibits D-1 and D-2).

SALES AND USE TAX DISTRIBUTION, 02LSO-0098.W1

Ms. Burton and Mr. Quiner explained the bill.  The bill increases the local government distribution of sales and use tax revenue from 27 percent to 33 percent.  No action was taken on the bill by the Committee, but the Committee decided to keep all options on the table at this time (see Exhibit E-1).

SPECIAL DISTRICTS-REPORTING, 02LSO-0102.W1

Mr. Mike Geesey, Director and Ms. Pam Robinson of the Department of Audit, explained the bill (see Exhibits F-1 and F-2).  The bill imposes reporting requirements on special districts, standardizing auditing report functions.  After discussion, Representative Huckfeldt moved that page 3, line 5, change the amount from $5,000 to $25,000.  The motion passed.  The Committee asked for the change to be made and the bill will be brought to the next meeting.

There being no further business, the meeting was adjourned at 5:30 p.m.

Tuesday

August 21, 2001

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

SCHOOL FINANCE INFORMATION

Note:  There was a transcript taken of this discussion by a court reporter.

Mr. Dave Nelson and Ms. Mary Byrnes, Legislative Service Office, and Mr. Larry Biggio, Department of Education, explained the four areas which were assigned to the Joint Revenue Interim Committee to study for education finance (see Exhibit G-1).  The four areas assigned to the Committee are:  1) budget and application cycle,  2) excess cash reserves, 3) interest income not included as local revenue, and 4) local tax collections.  Ms. Byrnes provided the Committee specific information on revenues held by individual school districts (see Exhibit  G‑2). 

At the conclusion of the discussion, Cochairman Nagel moved the Committee request a bill be drafted addressing the four assigned topics.  The motion passed.

Mr. Mark Higdon, Campbell County School District, indicated the revenue issues have been studied before.  Mr. Higdon hopes the Committee will study the topics and have a plan for the next session to look at what the impact of the changes will be on the school districts.  There may be a constitutional question involving the school district reserves issue.  He would like to involve the educational community before he answers whether he thinks some of the suggestions are good ideas or not.

SCHOOL DISTRICT INFORMATION ON RESERVES

Mr. Frank Johnson, Lincoln County School District, provided the Committee with information on cash reserves held by a school district (see Exhibit G-3).  Mr. Johnson walked the Committee through several examples of how cash reserves impact a school district's budget.

After discussion, Representative Anderson moved to have the LSO, the Department of Education, and the school districts identify tasks for the Committee to address and to draft a bill to address the reserve issues for consideration at the next meeting.  The motion passed.

DEPARTMENT OF TRANSPORTATION REVENUE NEEDS

Mr. Sleeter Dover, Director of the Department of Transportation, addressed the Committee on revenue needs of the department related to expanding several highways in the state to four lane highways (see Exhibit H-1).  Mr. Dover indicated several studies have identified the potential need for additional four lane highways in the state.  The plan is to open up the central part of the state for commerce, tourism and personal travel and visitation.  He indicated the Joint Transportation and Highways Interim Committee has requested a bill be drafted to look at a $200 million general fund appropriation to the department to begin the process of expanding the highways to four lanes. 

Mr. Dover also addressed the need for the two state planes to be replaced.  He indicated the two planes are over 20 years old, they are not made anymore and parts are difficult to find.  He indicated the cost of replacing the planes would be from $8 to $12 million.

COMMITTEE DISCUSSION ON REVENUE OPTIONS AND SOURCES

Electrical Generation Tax:

The Committee took no formal action on electrical generation tax, but it remains one of the options for the Committee.  The Committee requested a bill be drafted imposing a one-half mill on the production of electricity with an effective date of 2003.

Fuel Rod Storage Project:

Mr. Robert Anderson of Riverton, President of Nucor, provided the Committee with changes which have taken place regarding the storage of spent nuclear fuel (see Exhibit J-1).  Mr. Anderson feels Wyoming could safely have a spent nuclear fuel temporary storage facility.  He feels such a facility would generate sufficient amount of taxes to assist the state in its current revenue needs.

Mr. Tom Jones explained there is an up-front permitting fee for such a facility and proposes an annual acceptance tax and a hazardous material transportation tax.

After discussion, the Committee asked a bill be drafted on the nuclear storage facility including the addition of taxes. 

Statewide Mill Levy:

The Committee requested a bill be drafted imposing a statewide mill levy for the purposes of state revenue.

Sales Tax Increase/Exemptions:

The Committee asked a bill be drafted increasing the sales and use tax by one-cent. 

Income From Known Resources:

Fuel Tax:

Representative Deegan moved the Committee request a bill be drafted increasing the fuel tax by $.07 per gallon, with exemptions in place, to be used for the highway fund only.  The motion passed.

Coalbed Methane Tax:

Following discussion, the Committee did not request a bill be drafted imposing a coalbed methane impact tax.

Coal Bonus Bids:

Mr. Marion Loomis, Wyoming Mining Association, indicated they are projecting around $39 million per year for the next three to four years in coal bonus bids.  The Committee took no action in this area.

Real Estate Transfer Tax:

The Committee asked a bill be drafted based on last year's real estate transfer tax.  The minimum fair market value for a house to quality for the tax is to be $200,000.  The tax should not be imposed on industrial transfers.  The state's portion of the revenue (fifty percent) should  go to the capital construction account, with the remaining 50 percent to be distributed to local governments.

PUBLIC COMMENT

Mr. George Parks, Wyoming Association of Municipalities, indicated he had sent the Committee suggestions for distribution of above the cap de-earmarking (see Exhibit K-1).  Mr. Parks would like to see these options remain on the table.

Mr. Michael Walden-Newman, Wyoming Taxpayers Association, thinks the Legislature should look at a property tax on the full value of all property in the state.  He indicated one mill on $48 billion of fair market value of the state would raise more than one mill on the assessed valuation.  He indicated the Attorney General thinks it would take a constitutional amendment to do this.

Ms. Burton suggested the Committee look at liquor and tobacco taxes.  No action was taken by the Committee on this issue.

Cochairman Peck announced the next meeting of the Joint Revenue Interim Committee will be October 29 and 30, 2001, in Casper beginning at 10:00 a.m. on the 29th and 8:30 a.m. on the 30th.

There being no further business, the meeting was adjourned at approximately 3:30 p.m.

Respectfully submitted,

Senator Robert A. Peck

Cochairman