Optional city tax bill faces major setback

By Ramsey Scott

Wyoming Tribune Eagle Via Wyoming News Exchange

CHEYENNE — Cities looking for a new tool to raise revenue independent of county input suffered a major setback Thursday.

A bill to allow cities to put an optional municipal tax question to their residents failed to find support Thursday in the Joint Revenue Interim Committee. A similar version of the bill was tabled Tuesday by the Joint Corporations, Elections and Political Subdivisions Interim Committee.

Cheyenne and other municipalities had pushed the Legislature during interim meetings to allow cities to put forward a tax question independent of county government and voters in unincorporated areas. Cheyenne Mayor Marian Orr testified Tuesday in the Corporations Committee about the dire revenue needs in the city, and that sentiment was echoed Thursday by Laramie City Manager Janine Jordan.

Jordan said the Laramie City Council had recently voted 9-0 to support the proposed bill. The failed legislation had also gained unanimous support from the Wyoming Association of Municipalities, said Rick Kaysen, the group’s executive director and former Cheyenne mayor.

Also, Casper, in its list of legislative priorities for 2018, said it supported revisions to state tax laws to allow increased municipal revenue capacity, such as local option tax revisions, and sales and use tax allocation revisions.

Over the past few years, the issue has made several appearances on the Legislature’s agenda. But each time, including during this year’s session, the bill failed to find enough support to become law.

Rep. Cathy Connolly, D-Laramie, said she was a former opponent of the idea. But the minority floor leader said she had made a 180-degree turn on the idea in recent years. She said Laramie and other cities needed to have the ability to make their own decisions on what to fund.

“I’m in favor of letting municipalities choose to tax themselves,” Connolly said.

While major cities came out in support of the legislation, small towns and county governments were vehemently opposed to an optional tax as an avenue for fixing revenue shortfalls.

Pete Obermueller, executive director of the Wyoming County Commissioners Association, said allowing city residents to vote on their own tax increases would mean countywide tax issues were destined to fail.

Obermueller said he knows cities are hurting to find new revenues to fill a gap left by state budget cuts. But a city that raised its taxes would be less inclined to vote for tax increases that would only benefit unincorporated areas of a county, causing revenue issues in smaller towns and for rural county residents.

“The crux of our issue with this bill isn’t so much an argument with municipalities on their need for infrastructure,” Obermueller said during Thursday’s committee hearing. “The issue is this bill has distracted us from finding a way to do that without harming smaller towns and counties.”

Obermueller said the Legislature should be focused on finding ways for both larger municipalities and smaller communities to raise revenue without causing each other financial pain.

While Cheyenne was a major supporter of the bill, the city’s neighbor to the east voiced its displeasure with the idea Thursday. Both the mayor and a town council member from Burns spoke against the idea of letting Cheyenne raise sales and use taxes without Burns and other areas in Laramie County having a say.

Judy Johnstone, a member of the Burns Town Council, said allowing Cheyenne to raise taxes would essentially be taxation without representation on residents of Burns, who have to go to the city for shopping.

“The only communities where (a municipal tax) would be a viable option would be the larger ones,” Johnstone said. “This would be us paying a tax for something we didn’t vote for, that we didn’t like, that we didn’t want. Whereas with the sixth-penny (tax), it’s a countywide thing.”

Rep. Dan Furphy, R-Laramie, argued against the idea that a municipal tax passed by a city would represent a case of taxation without representation.

Furphy, who voted for the bill, said in everyday life, anyone who travels to another city, county or state pays taxes that they had no say in approving. And given that a nonresident traveling in that city uses the roads and infrastructure, he didn’t see it was unfair for a shopper to pay a tax to help maintain things like roads.

The Revenue Committee meeting Thursday was the last chance for the optional municipal tax bill to find support from a committee during the interim session. A lawmaker could still sponsor the bill independently of the committee process.