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2022 BUDGET SESSION LEGISLATIVE RECAP

Fiscal and tax topics of interest

FINAL RECAP

The 2022 Budget Session of the 66th legislature came to end on the evening of Friday, March 11th in Cheyenne. It was a fast 20-day session that came with interesting debate on the state's fiscal policy.

The top 4

The legislative Management Council set the tone early on and announced four top priorities to take precedence over the session. Two of the four priorities were constitutionally required, the 2023-24 biennial budget and redistricting; while setting Capitol Construction as a top priority and appropriating an unprecedented amount of federal funding from the American Rescue Plan Act (ARPA). Below is a summary of final actions taken on the top four priorities:

• Priority #1: Presenting a balanced biennium budget for FY 2023 - 2024. The final version includes ARPA revenue replacement for the General Fund.
• This year Governor Gordon recommended a flat budget for FY 2023-24 of approximately $2.7 billion after presenting 15% in cuts to the FY 2021-22 supplemental budget of $2.5 billion, down from $2.96 billion.
• The Joint Appropriations Committee worked the Governor's recommendations and presented the legislature with approximately a $2.77 billion General Fund budget in the form of two mirror bills SF 0001 General government appropriations and HB 0001 General government appropriations - 2.
• After passing through both chambers, the Joint Conference Committee (JCC) met to discuss amendments on the budget. The House spent $46 million more in their draft budget than the Senate. There were 37 amendments heading into the JCC of which 16 were identical and added $90.2 million to the appropriation.
• Of those adopted items, significant appropriations included: $75 million in matching infrastructure, $7.5 million to community colleges, $2.5 million for development districts and $3.5 million in property tax relief.
• The final FY 23 - 24 budget of $2.9 billion is about $400 million less than the FY 21-22 supplemental budget and the state still faces a $128 million structural deficit in the School Foundation Program (K-12 funding).
• The Legislative Stabilization Reserve Account (LSRA) otherwise known as the "rainy day account" was left in surplus $1.43 billion as the estimated balance on June 30, 2024. *Note: This will change with actual revenues and reversions, etc.
• SF 0001 was ultimately accepted and signed into law as SEA No. 12 after the Governor presented his line-item vetoes.
• Review all the amendments and final action taken here.
• See the Fiscal Profile for 2021-22 and 2023-24 here. *
• Priority #2: Appropriate Federal Stimulus Dollars which include ARPA Direct funding.
• SF 0066 American rescue plan recovery funds appropriations - appropriates $385.7 million from ARPA to eligible expenditures.
• After passing both Chambers, SF 0066 headed to the JCC with 16 additional amendments from the House. The JCC adopted $90.2 million of combined amendments and both chambers rejected the Governor's line item veto to strip the bill of an appropriation of $50 million to water projects and the Governor's authority on appropriation of any of these funds.
• See the final accepted amendments here.
• Read the Governor's response here.
• Review SEA No. 20 here.
• SF 0098 Federal emergency COVID-19 relief funding-limitations amends the Governor's authority with ARPA dollars and allows $50 million to the office of the Governor for purposes of responding to the COVID-19 public health emergency.
• This bill is now signed into law as SEA No.0018, but was originally vetoed by Governor Gordon as he felt it was "redundant and unnecessary" with SF 0066 and "unnecessarily constrains the Governor's authority to expend funds on emergency programs". The Senate and House overrode the Governor's veto by two thirds vote in both chambers which means it passed as adopted.
• See the final accepted amendments here.
• Read the Governor's response here.
• Review SEA No. 18 here.
• Priority #3: Finalize Capital Construction utilizing opportunities from ARPA Construction dollars and General Fund budget.
• SF 0067 State funded capital construction appropriates funds for specified capital construction state projects.
• The $249.3 million appropriation stayed in tact with a few amendments which brought the total to $252.48 million with adding $2.8 million for State Parks land purchase and $250k for State Constitution display.
• Additional funding of $190.8 million went to miscellaneous state construction projects and $58.6 million went to University of Wyoming as a block grant to fund the Corbett natatorium, War Memorial West Stands project and College of Law renovation. See the full list of projects here.
• Final engrossed SEA No. 19

• Priority #4: Complete redistricting which is constitutionally required every ten years.
• HB 0100 Redistricting of the legislature adopts legislative districts based upon the 2020 census.
• The legislature debated maps until the last minute settling on a final plan that creates 62 house and 31 senate districts.
• Senate District map
• House District map
• Final engrossed House Enrolled Act 62.

Other items of interest

As time allowed, the legislature considered 279 bills. Priority was given to committee bills then approximately two individual bills were heard per sponsor. Of the 59 bills we tracked, below are the highlights of other bills of interest during the session:

HB 0021 Repealing exemption for one-way pagers, now HEA No. 0002, has been signed to law. This removes sales tax on service for one-way pagers. Even though the fiscal note is de minimis, this is a start to looking at the 50+ exemptions on the sales tax base.

Fiscally responsible bills for special districts PASSED both Chambers:

• HB 0056 Examination of books of certain districts and entities, HEA No. 0037, as amended (clarifies recreation boards as special districts and grants authority to the Department of Audit) and
• HB 0060 Fiscal training and enforcement of financial reporting, HEA No. 0029 signed into law, as amended (timely reporting requirements and training for entities and allows Department of Audit to exercise authority).

There were several attempts for tax reductions:

• SF 0084 Mineral royalties-proportional severance tax relief (would have created severance tax refunds or oil gas and coal severance taxes based on increased federal royalty rates) ultimately failed.

However, two attempts successfully passed:

• HB 0131 Nuclear power generation and storage-amendments, now HEA No. 0059, (House amended in exemption after July 1, 2035 using 80% uranium sourced from the U.S. or subject to a $5/MWh tax), and
• HB 0105 Severance tax reduction - coal, freshly signed HEA No. 0060 (reduces severance tax from 7% to 6.5%) was a HUGE win for the coal industry to bring equity and parity to severance tax rates amongst minerals.

Team photo L- R for HB 105, now HEA No. 0060: WTA Executive Director, Ashley Harpstreith, Wendy Lowe, Peabody Energy, Governor Mark Gordon, WMA Executive Director Travis Deti and David Bush, Black Hills Energy.

Bills that failed

Finally, not all bills crossed the finish line, including the bad ideas we opposed:

• HJ 0004 Budget sessions-bill introduction. would have amended the Wyoming Constitution and repealed the introductory vote requirement for bills in a legislative budget session. See our white paper on Say NO to HJ0004 Budget sessions - bill introduction here.
• HB 0025 Lodging sales tax-exemption. If introduced, lawmakers would have considered exempting outfitters and guides from lodging tax which would have created disparity between taxpayers and would have eroded the tax base.
• SF 0042 Reporting on business franchise tax. Failing introduction as a Joint Revenue Committee sponsored bill, this bill would have required the Secretary of State to collect data on total gross receipts attributed to earnings in Wyoming by sales or percentage of payroll in Wyoming. The Joint Revenue Committee tabled 22LSO-0219 Business franchise tax at their December interim meeting which was an attempt to adopt a gross receipt tax or corporate income tax.
• SF 0069 Property tax limits would have put a 5% cap on taxable value and was unconstitutional as the state cannot cause disparity between different classes of taxpayers. WTA testified against this bill in the Senate Agriculture committee, where it was ultimately defeated.

The following bills we supported, but they failed by missing deadlines:

• HB 0023 Agricultural land qualifications-annual gross revenues. This proposal would have amended production qualifications from $500 to $5,000 in gross revenues to qualify for the agricultural land valuation. Supported by industry, this bill would have created equity, lessened disparity between all classes and provided stability for the tax base. It failed introduction in the House.
• SF 0020 State assessment of independent power producers. This Joint Revenue Committee sponsored bill would have clarified that the state is responsible for the valuation and assessment of independent power producers. Ultimately it failed introduction in the Senate and independent power producers will now be assessed locally unlike other power producers similarly situated who remain centrally assessed.
• SF 0111 Wyoming financial transparency act - Required reports from the state Treasurer's office providing more clarity of revenue reporting and promoted strong, sustainable fiscal policy for Wyoming. After passing 5-0 in the Senate Corporations committee, it was not considered in Committee of the Whole in the Senate. A similar provision was adopted in the budget.

WTA Executive Director Ashley Harpstreith testifies against SF 0069 in Senate Ag which ultimately failed. 

Federal funds are not the answer to

balancing our tax structure 

The following editorial was sent out to statewide newspapers on January 19, 2022

by Ashley Harpstreith, WTA Executive Director

In Wyoming, we are blessed to have critical services like public safety, roads and education largely funded by the state’s vast natural resources. In large part thanks to the mineral industry, as well as agriculture and tourism, Wyoming has for generations sustained its economic engine, providing an attractive lifestyle with more expendable individual income and choices, aligning with our independent values and appreciation of limited government interference.  

In fact, this allows the average Wyoming citizen to have one of the lowest tax burdens in the nation. According to the Wyoming Economic Analysis Division, an average family of three, with an income of $65,000 and a home valued at $270,000, contributes $3,770 in state taxes through sales, excise and property taxes while receiving nearly $28,280 in critical state services through county, city, special districts, K-12 education and state services. And yes, while Wyoming individuals and businesses, including mineral companies, do bear the burden in sending $6.4 billion to the federal government in taxes, $7 billion is returned to the state through payments for services such as payroll, matching highway dollars and support of parks and federal lands.     

This tax structure has served the average individual in Wyoming well, but it all comes at a risk. We know from experience that relying heavily on revenue from price-dependent commodities is volatile and uncertain. However, the discussion of balancing or diversifying our tax structure becomes a broken record when elected officials exercise the foresight of saving just enough until the cyclical nature of prices bounce back. For decades, Wyoming has had the ability to survive in times when the market is down by utilizing our savings, otherwise known as “rainy day funds,” until revenues are back in the black.  

When the 66^th Legislature convenes for the 2022 Budget Session they will be faced with the constitutional requirements of adopting a balanced budget for the 2023 - 2024 biennium. Along with the regular budget business, the Governor and Legislature will also continue to oversee the significant influx of federal funding. The state is set to receive one billion dollars in flexible funds from American Rescue Plan Act (ARPA) that will be appropriated as directed from the legislature and Governor. This is just part of the eight-billion-dollar package the state has received in total from the ARPA and CARES Act federal funding. Make no mistake, these funds are not created through economic activity. Not only will they not bounce back after they are gone like oil prices, they will likely pass a burden on to future generations. This makes it even more important to invest in immediate crisis-related needs and be thoughtful with the remainder to ensure benefits are long-term not short-sighted. We cannot view these funds as yet another up-cycle in our traditional commodities. Not only must the Legislature use the same conservative saving approach as their predecessors, but they must do so all the more. Federal funds are not the answer to balancing our tax structure. 

We encourage our policy makers to invest these funds in such a way that does not obligate future citizens or legislatures with the burden of paying for future ongoing costs. Wyoming should treat federal stimulus dollars more carefully than it treats its own budget. Wyoming does not act like the federal government and nor should it. Wyoming has always paid our bills and does not rack up an endless debt for our grandchildren and generations to come.    

TOAST & TAXES 2022

2022 Budget Session conversations on fiscal policy

Thanks to all who sponsored and participated in this years events! We had tremendous participation with thoughtful conversation!

WTA SPONSORS

Thank you for your continued support!!

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