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In the Hole

Written by Dennis Sun

The old saying that if you find yourself in a hole, stop digging, holds true for the State of Wyoming at this moment in time. The good part is, those who manage the dollars and laws of the state, have stopped digging. We are in the “how do we crawl out of the hole?” phase now.

State revenue has risen lately, so the hole for Wyoming to crawl out of is not as deep as it was. A month or so back, the state’s deficit was around $1 billion for the next two-year budget cycle, which will be discussed during the Wyoming Legislature’s Budget Session this February in Cheyenne. But the difficult piece is the more than $500 million short-fall in the school operations account.

The options for the Wyoming Legislature this next session are cuts in spending, increases in taxes – either property or sales taxes, changes in how we manage our savings or all of the above. I’ve always liked to raise sales taxes because they are so equitable. Everyone gets nailed, and so does anyone traveling through the state for whatever reason. Those who spend more, pay more. Raising property taxes is most likely the least favored option in Wyoming.

A recent poll released by the Wyoming Business Alliance shows that Wyoming voters want the Legislature and Governor’s budgets to include cutting administrative education spending. Those polled were really opposed to increasing sales and property taxes. In fact, 71 percent of voters opposed raising sales taxes or property taxes.

This poll differs from a poll released late this summer by the Wyoming Education Association, which said over 75 percent of voters polled were willing to pay more taxes to pay the cost of public education. We do have a difference in the results of these polls.

Remember, the state has to have a balanced budget. There is no way around it.

The Wyoming Business Alliance poll also said 80 percent of respondents called for more cuts in school administration costs and that we should be able to do that without hurting schools.

Along party affiliation, as one can imagine, more Independents and Republicans than Democrats want to cut costs instead of raising taxes.

There is currently draft legislation to impose a one percent excise tax on leisure and hospitality. That would be a tax on arts, entertainment, recreation, motel and food service. It would be a tax on tourism and entertainment of all kinds, which would nail all out-of-staters, but it also would affect Wyoming businesspeople who travel the state for work.

I guess if you want to tax someone, tourists and those in the state who like beer and cigarettes or those who want entertainment is a place to start.

There are also some people looking at changing the laws governing how Wyoming’s investment revenue can be spent. That is, they favor allowing more of the gains to be spent directly instead of being placed in reserve accounts or used as  principle. This was a popular move in the Wyoming Business Alliance poll, and it would be a good way to find money during tough times, but it would be wise in the good times to go back to our standard of putting money in savings. That has worked well over the years. We would just have to decide what the trigger was.

In my opinion, all of the above works, except raising property taxes. Increased property taxes can hurt a lot of businesses.