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November 7 and 8, 2002
Room 302, State Capitol
Cheyenne, Wyoming
Senator Robert Peck, Cochairman;
Representative Pat Nagel, Cochairman;
Senators Irene Devin, Dick Erb, Rae Lynn Job and Jayne Mockler;
Representatives Rodney "Pete" Anderson, Chris Boswell, Roy Cohee, Roger Huckfeldt, Phil Nicholas (November 8 only) and Jane Wostenberg.
Legislative Service Office: Mark Quiner, Assistant Director; Mr. Bill Mai, Senior Legislative Analyst and Dean Temte, Legislative Analyst.
Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting.
Representatives Phil Nicholas (November 7 only), Doug Osborn and Don Warfield.
All meeting materials and handouts provided to the Committee by the Legislative Service Office (LSO), public officials, lobbyists, and the public are referenced in the Meeting Materials Index, attached to the minutes. These materials are on file at the LSO and are part of the official record of the meeting.
Chairman Peck called the meeting to order at 8:30 a.m. The order of the meeting generally followed the prepared agenda (see Attachment C).
Mr. Bill Mai and Mr. Dean Temte, Legislative Service Office, provided the Committee with an update on the CREG report. It was indicated there is a big change in natural gas, sales and use tax has increased and there is a strong economic performance in coalbed methane, which has helped the sales and use tax picture. Investment income has been revised downward by $12 million, a result of the bad stock market performance. In severance taxes there was a net downward revision of $14 million during the biennium. Coal lease bonuses are still okay, although it will not be known what the final numbers are for some time.
The overall increase to the bottom line is $63 million.
Mr. Allen Black, Department of Revenue, provided the Committee with information on the proposed extension of the property tax relief program (see Exhibits A-1 through A-3). Mr. Black included fiscal information and the total on the proposed bill. The total cost to counties is currently around $90,000. On the following day, Mr. Black provided the Committee with a proposed addition in modifying the income eligibility requirements and the administration of the program (see Exhibit A-4). The Committee did not adopt the proposed modifications. Following discussion, Representative Anderson moved the Committee sponsor the bill. The motion passed with a roll call vote of 11 ayes and 0 noes (see Exhibit A-5).
Mr. Dan Noble, Department of Revenue, explained the bill which allows the department to revoke inactive sales and use tax licenses held by vendors. The bill provides notice to inactive vendors and allows them to respond and explain why the license has been inactive (see Exhibit B-1).
Following discussion, Representative Huckfeldt moved the bill be amended to provide that any vendor whose license has been suspended may apply for reinstatement within 10 years and shall not be assessed a new license fee. The amendment failed.
Senator Mockler moved the Committee sponsor the bill. The motion passed with a roll call vote of 9 ayes and 2 noes (see Exhibit B-2).
Dr. James Harper, retired cardiac surgeon, testified in support of the bill and provided testimony on the dangers and health costs associated with smoking (see Exhibits C-1 and C-2). Dr. Harper indicated the medical cost for the State of Wyoming, due to tobacco related illnesses, is around $106 million per year.
Ms. Sally Belcher, representing the Wyoming Chapter of Pediatricians, also testified in favor of the bill. She supports a tax increase. She indicated the average smoker begins smoking at age 9 and has a brand preference by age 15. She indicated there is no more addicting substance than nicotine.
Ms. Loretta Wolf, American Cancer Society, also testified in support of the bill, and indicated tobacco is a very serious youth problem right now.
Dr. Diane Gallagher, Wyoming Substance Abuse Program, indicated 28 percent of Wyoming high school youth are smoking and price is a factor for them. She testified in favor of the bill.
Mr. Curt Kaiser testified he visits hospitals on a regular basis and is aware of the devastating affect on patient health care due to tobacco.
Mr. Michael Walden-Newman, Wyoming Taxpayers Association, provided the Committee with information on the impact of a pack of cigarettes compared to the average wage in the State of Wyoming versus all other states (see Exhibit C-3). He testified in opposition to the bill due to the cost concerns.
Mr. Mike Moser, Wyoming Retail Merchants Association, also testified in opposition to the bill. He indicated raising the tax on tobacco will hurt Wyoming small businesses (see Exhibit C‑4).
Mr. Tom Jones, representing wholesalers, indicated the per capita sales for tobacco in Wyoming has declined over the past seven years. A tax increase may have unintended consequences. He indicated the master settlement agreement is tied to tobacco sales in the future.
Mr. Dan Sullivan, Philip Morris, testified the Committee should consider the policy implications of raising taxes. He indicated the gray market in China is a huge factor and many cigarettes come here illegally. Internet sales are also not collecting sales tax.
Mr. Bill Thomson, Brown and Williams Tobacco Company, indicated when the Legislature increased the cigarette tax from eight to twelve cents per pack, it looked at the surrounding states because it did not want to send Wyoming citizens out of state to purchase tobacco products. That also results in a loss of sales tax.
Following discussion, Senator Mockler moved to amend the bill to keep the same distribution system for the tobacco tax we currently have without having the increased revenue go to the tobacco settlement fund. The amendment failed.
Following discussion, Senator Mockler moved the Committee sponsor the bill. The motion passed with a roll call vote of 6 ayes and 4 noes (see Exhibit C-5).
Fuel tax distribution, 03LSO-0096.W1
Representative Huckfeldt explained the bill which would redistribute fuel taxes based on a different formula including miles of roads within a county (see Exhibit D-1).
Mr. Temte provided the Committee with the potential fiscal impact of the bill, from the Department of Transportation (see Exhibit D-2).
Mr. Ken Hamilton, Wyoming Farm Bureau, indicated he supports the bill and most of the members of the farm bureau feel some county roads are not being maintained adequately.
Mr. Joe Evans, Wyoming County Commissioners Association (WCCA), indicated most counties can often obtain money for new road construction but maintenance is always a problem.
Mr. Bill Glanz, Washakie County Commissioner, indicated the counties cannot agree on the distribution formula.
Representative Huckfeldt moved the Committee sponsor the bill as a Committee bill. The motion passed with a roll call vote of 6 ayes and 5 noes (see Exhibit D-3).
Specific purpose excise tax, 03LSO-0095.W1
Representative Huckfeldt explained the bill which allows a county to impose up to two-cents for a specific purpose tax as opposed to the one-cent limitation that is current law (see Exhibit E‑1). Mr. George Parks, Wyoming Association of Municipalities, indicated his organization supports the bill. He indicated it would be helpful in the five counties that are currently not imposing the optional general purpose tax..
Following discussion, Representative Huckfeldt moved the Committee sponsor the bill. The motion passed with a roll call vote of 8 ayes and 3 noes (see Exhibit E-2).
Natural gas valuation, 03LSO-0091.W4
Mr. Bruce Hinchey, Petroleum Association of Wyoming, introduced Mr. Perry Pierce of Burlington Resources. Mr. Pierce explained the bill and the accompanying amendment (see Exhibits F-1 and F-2). The bill is the result of a cooperative effort between industry, the Department of Revenue, and the counties. The bill would value producer processed natural gas using the net back method and would eliminate the proportionate profits method that is currently in the law.
Mr. Earl Atwood and Mr. Randy Bolles, Department of Revenue, also provided the Committee with information on the bill. Mr. Bolles also walked the Committee through an example and provided information on the potential fiscal impact from the bill (see Exhibit F-3).
Mr. Evans, WCCA, and Randy Federoff, mineral auditor, also discussed the bill. Mr. Evans indicated his association generally supports the bill. Mr. Federoff is concerned about the rate of return definition and whether the single B bond rating from Standard & Poors is the proper rate of return to be used.
Following discussion, Representative Nagel moved the Committee adopt the proposed amendment on the definition of gross capital investment. The motion passed.
Representative Nagel moved the language "includes, but is not limited to," be removed from the bill. The motion was divided. As a result of the vote, two references to that phrase on page 2, lines 15 and 36 were deleted.
Representative Nagel moved on page 6, lines 17 through 30 be repealed from the bill. The motion passed.
Following discussion, Representative Anderson moved on page 5, line 15, after "facility" insert "as determined by the department of revenue". The motion was withdrawn.
Representative Huckfeldt moved the effective date be changed to 2003. The motion passed.
Following discussion, Representative Huckfeldt moved the Committee sponsor the bill. The motion passed with a roll call vote of 11 ayes and 0 noes (see Exhibit F-4).
There being no further business, Chairman Peck adjourned the meeting at approximately 4:00 p.m.
November 8, 2002
Chairman Nagel called the meeting to order at approximately 8:30 a.m.
Update on Select Committee on Capital Financing and Investments
Representative Boswell and Senator Mockler provided the Committee with information on the activities of the Select Committee. The Select Committee will meet next week and Senator Mockler reviewed the agenda and action items.
Personal Property Late Filing and Nonfiling Penalty
Mr. Black explained the problem of businesses which fail to file a return listing all the personal property owned by the business (see Exhibit G-1). Mr. Black proposed that penalties be enhanced for failure to file the personal property report with the county assessor for property taxation purposes.
Ms. Brenda Arnold, Wyoming County Assessors Association, indicated the association has no position on this proposal.
Ms. Kim Lovett, Wyoming Treasurers Association, indicated her association would support the bill if the penalty provisions were taken off the tax bill and were treated separately.
Following discussion, Senator Mockler moved the Committee sponsor the bill. The motion failed with a roll call vote of 5 ayes and 7 noes (see Exhibit G-2).
Excise taxes-fuel tax exemption, 03LSO-0244.W1
Mr. Noble explained the bill which corrects an inadvertent error made during the Title 39 recodification. He indicated there should be no sales and use tax exemption for the leaking underground storage tank as well as the two-cent fuel tax for education. Those provisions were inadvertently changed when Title 39 was recodified and this bill would return them to the original law (see Exhibit H-1). Following discussion, Senator Peck moved the Committee sponsor the bill. The motion passed with a roll call vote of 12 ayes and 0 noes (see Exhibit H-2).
Streamlined Sales Tax Agreement
Mr. Atwood and Mr. Noble explained Wyoming is within days of signing the streamlined sales tax agreement. They are still working on several issues, including farm implements, the definition of digital property, and bundling of taxable and nontaxable items.
Counties Right to Appeal
Mr. Martin Hartsog, Attorney General's Office, provided the Committee with information on the Sublette County v Exxon Mobile Corporation case (see Exhibit J-1). Mr. Hartsog explained the history of the case and explained the holding of the Supreme Court. Essentially the court held that if the legislature wishes to grant a county the right to appeal a methodology used by the Department of Revenue during the mineral valuation process, the legislature must expressly do so. The court held that current law does not expressly grant a county the right to appeal.
Ms. Betty Fear and Mr. Bill Cramer, Sublette County Commissioners, then provided the Committee with information from the county's perspective (see Exhibits J-2 and J-3). The county commissioners explained in Sublette County, Exxon is a big taxpayer and sometimes the county needs to challenge the reported gas production from natural gas producers to obtain all the money owed to the county and to the state by way of property taxes. Mr. John McKinley, attorney for Sublette County, also provided extensive information and possible solutions to the problem presented by the case.
Following discussion, Chairman Nagel explained the Committee was obtaining an overview of the issue at this time and was not prepared to take formal action.
Severance tax uranium, 03LSO-0170.W1
Mr. Marion Loomis, Wyoming Mining Association, provided information on the history of uranium production in the state, as well as the severance tax exemption granted to uranium tax production (see Exhibits K-1 and K-2). Mr. Loomis explained that although the uranium industry enjoys a severance tax break it pays around $1.5 million in property taxes per year. There is only one uranium mine in the state active at this time. The mining operation is such that the severance tax exemption is still needed for them to operate.
Following discussion, Senator Mockler moved the Committee sponsor the bill. The motion passed with a roll call vote of 10 ayes and 1 no (see Exhibit K-3).
Sales and use tax farm implements exemption, 03LSO-0226.W1
Mr. Gary Lathrop, a farm implement dealer in Casper, provided the Committee with information on sales tax on farm implements, including the bill to make farm implements completely exempt from sales and use tax (see Exhibits M-1 and M-2). Mr. Lathrop explained there are currently two states that impose a full sales and use tax on farm implements. A vast majority of states impose no sales tax. Mr. John Bunker, a Wheatland farm implement dealer, indicated the sales tax exemption is necessary for them to compete with the surrounding states that do not impose a sales tax on farm implements. Mr. Bob Shepherd, a livestock feeder in the Wheatland area, stated the drought has been a problem for his and every other business in the state. He is looking at a future purchase of farm implements and will probably buy out of state due to the sales tax imposition. Following discussion, Representative Huckfeldt moved the Committee sponsor the bill. The motion passed with a roll call vote of 6 ayes and 5 noes (see Exhibit M-3).
Wireless Telephone Emergencies
Ms. Liz Zerga, Western Wireless Company, indicated a fifty-cent surcharge is now placed on all telephone land line bills per month. The federal government has indicated wireless telecommunication companies should also begin to impose the fifty-cent surcharge for enhanced 911 service where a caller's location may be determined by the 911 dispatch center. Ms. Zerga indicated the wireless companies will be moving forward with a bill to address this issue.
Adjournment
There being no further business, Chairman Nagel thanked everyone for their help and assistance as she has chaired the Committee and adjourned the meeting at approximately 3:00 p.m.
Respectfully submitted,
Senator Robert Peck, Representative Pat Nagel,
Cochairman Cochairman