Wyoming has a problem. We hate taxes. But we love the public services that our nearly complete reliance on the energy industry has afforded us.
But in case anyone had any doubts, last week’s sudden shuttering of Blackjewel LLC’s Eagle Butte and Belle Ayr coal mines in Campbell County made clear that the energy landscape is changing in the world and in Wyoming.
This week, the Joint Interim Revenue Committee met in Cheyenne. On the agenda: discussions of wind energy production and a corporate income tax.
The committee also heard a fiscal-impact report from public policy consultants REMI, which assessed how certain taxes might impact the state’s budget.
The long and short of the report: Given Wyoming’s current tax structure – no corporate income tax, no personal income tax – it does not make economic sense to recruit any non-resource sector businesses to the state. Only growth in the resource sector has a net financial advantage to the state.
In fact, recruiting families to the state actually adds financial strain.
The average three-person family with an income of $60,000 that owns a home valued at $190,000 pays roughly $2,910 in taxes annually in Wyoming. That comes from a variety of taxes – everything from sales tax to gas tax to vehicle registration to property tax.
Yet state and local governments spend roughly $30,700 annually providing services to that same family. This includes city, county and state services; special district services; and K-12 education.
That means each of us receive about 10 times more in public services from the state than what we pay for.
This math worked well during the energy boom, because extractive industries fund roughly 70% of the state’s budget. Unfortunately, the boom went bust, and we may never again experience a similar boom. In the meantime, there are bills to pay. And that’s a problem.
This is not a new problem, it is a perennial problem and one that the Revenue Committee has discussed for at least the past three years during interim meetings: How should Wyoming pay for the services we enjoy? How should the state fund itself to inoculate against boom-and-bust cycles?
Gov. Mark Gordon has tasked agency heads in state government with identifying potential cost savings in their departments and bringing them forward. And while elected officials continue to look for cost savings, the reality is that the state’s 2019-20 budget is the smallest budget in 15 years.
Cuts alone will not bring Wyoming the prosperity and economic stability it has long sought. And continued declines in the extractive energy industry will only exacerbate this problem.
For the past three years or more, the Joint Revenue Interim Committee has discussed revenue-generating ideas – an increased cigarette tax, a tourism tax, and an increase in taxes on electricity generated by wind energy. So far, all those measures have failed.
Right now, we aren’t paying our fair share, and we can’t expect the state’s fortunes to change much until we recognize this fact.