Wyoming Sen. Cale Case, R-Lander, joined former Wyoming Gov. Dave Freudenthal this week for an online discussion about tax issues in the state.
Much of the moderated conversation centered on Wyoming’s current tax structure, which Case said isn’t “sustainable” due to its over-reliance on revenues from minerals industries.
“We are all subsidized, to some extent,” Case explained. “We don’t contribute proportionately to our tax structure (because) we have enjoyed immense benefits from the mineral industry.”
Those benefits are likely to diminish in the future, Case said, predicting that “huge, structural, long-term” changes will have a negative impact on coal and oil production in Wyoming in the coming decade.
“We’ve got to clean house and make some changes,” he said.
Taxes on renewables
Some people have pointed to economic development and diversification as strategies for broadening Wyoming’s tax base, but Case said those efforts won’t be effective as long as new businesses – and the new residents they bring in – are also subsidized by mineral taxes.
“The more people we recruit that are mineral-industry dependent makes the state more dependent on the mineral industry,” he explained. “When we recruit someone in, we actually make it worse. We don’t create bigger economic opportunity in terms of a broader tax structure. We actually continue to increase our reliance on the mineral industry.”
Instead, he advised another approach: taxing renewable energy production – like wind and solar – more effectively.
Wyoming is a “very desirable place” to produce wind and solar power, Case said, but the state isn’t currently taxing those industries like it taxes minerals.
“(We need) a new structure,” he said, suggesting, for example, that the state could impose a gross receipts tax on companies that generate electricity in Wyoming.
A gross receipts tax would capture revenue from out-of-state purchasers as well as in-state residents, Case noted, and it could replace the current sales tax that only applies to electricity sold inside of the state.
“It won’t hurt us any more, but it will begin to collect revenues that we can use for decades to come,” he said. “The time to do it is now.”
There are other “great tools” legislators can use to start “protecting Wyoming’s future,” Case said, expressing optimism that, despite the “really difficult political environment” in the state, lawmakers will be able to “get a dialogue going” and “get a handle on” the situation.
“Taxing electricity (and) exports is a way to begin to get a handle on it,” Case said. “I’m still optimistic.”
The Wyoming Legislature’s upcoming budget session is set to convene Feb. 12.