Following the Legislature’s refusal to approve new sources of state revenue, Gov. Mark Gordon is proposing a deeper look into the tax structures of peer states.
Nearly every effort to legislate Wyoming into financial stability came to naught in the session that ended last month. Taxes on corporate income, lodging, sales and wind energy all died, though some came within nail-biting distance of passage.
Lacking a new revenue source, however, the state is left with a looming half-million-dollar gap in education funding.
In a press conference with reporters Friday, Gordon lamented the lack of progress on shielding Wyoming’s economy from the volatile energy market and its attendant booms and busts.
“I was a little disappointed,” he said. “We had some pretty mature conversations all through the session, and at the end it kind of rolled back and we ended up in the same place.”
Now, he said, he is asking the leaders of Economically Needed Diversity Options for Wyoming — better known as ENDOW, an initiative started by his predecessor, Matt Mead, to diversify the state’s economy — to study how neighboring, Republican-controlled states handle their taxes.
Gordon wants to “run our current revenue streams,” which depend heavily on the mineral industry, through the tax structures of those states. That will show “what happens if we reduce our reliance on coal and gas,” he said.
“We can look realistically at what those revenue streams mean,” he said, “and that way I think the people of Wyoming will be well informed.”
It’s unclear which states he will instruct the ENDOW Executive Council to investigate. However, during the 2018 interim session, the Legislature hired a national economic forecasting firm to do essentially the same thing, using North Dakota, Utah and Kentucky as models.
The firm, REMI, found that an influx of workers in several industries, besides minerals, would be a net loss to the state under its current tax structure. When ENDOW released a sweeping plan to diversify Wyoming’s economy in August, it noted that diversifying tax policy would be just as important.
But new and increased taxes are, at best, nonstarters for Wyoming lawmakers and, at worst, political suicide. So the unelected ENDOW Executive Council is the ideal body to study taxes, said Bob Viola, a member of the council and founder of high-tech Jackson company Square One Systems Design.
“We’re not quite as vulnerable to the outrage that any discussion of taxes can generate,” he said.
ENDOW Chairman Greg Hill, a Wilson resident and president of the energy company Hess Corporation, said council leadership has met with Gordon in recent weeks to discuss the study.
“The ENDOW team is in the preliminary stages of developing what this analysis will look like,” Hess said, “and hope to make an announcement in the coming weeks regarding our go-forward strategy.”
Meanwhile, the Legislature has finalized its list of interim topics, which includes plans to again consider tax reform. After two years of fierce opposition, though, it’s unclear whether a majority of lawmakers — particularly in the fiscally conservative Senate — will have an appetite for such measures.
Jerad Stack, another member of the ENDOW council, noted that it is composed of business people who will likely look at the issue through a different lens than the Legislature, bringing a valuable perspective to the subject of Wyoming’s tax structure.
REMI, for its study, selected only a few of Wyoming’s industries to run through the tax structures of other states: chemical manufacturing, agricultural food manufacturing, the utility sector and oil and gas.
Stack said he would be interested to see a wider array, perhaps including the finance and tech industries, among others. However, he said it’s too soon to say what ENDOW’s study will encompass.
In the council’s first round of meetings and recommendations, under Mead, taxing and revenue were outside its purview. Instead, the council focused on economic development initiatives — a good move, Stack said, since they didn’t want ENDOW to earn a reputation as “this tax thing.”
But, Viola said, with the economic development framework of the council’s first report in place, “the time has come to maybe look at the tax side of stuff.”
Correction: This article has been revised to reflect that Greg Hill is president, not founder, of Hess Corporation.