![[Top]](/images/nav-top.gif)
![[Back]](/images/nav-back.gif)
![[Home]](/images/nav-home.gif)
November 9 and 10, 2005
State Capitol, Room 302
Cheyenne, Wyoming
Senator Robert Peck, Cochairman
Representative Rodney “Pete” Anderson, Cochairman
Senator Pat Aullman
Senator Stan Cooper
Senator Jayne Mockler
Representative Gerald Gay
Representative Mary Meyer Gilmore
Representative John Hastert
Representative Tom Walsh
Senator Bill Hawks
Representative Kurt Bucholz
Representative Steve Harshman
Representative David Miller
Representative Bryan Pedersen
Mark Quiner, Assistant Director
Don Richards, Senior Research Analyst
Dean Temte, Legislative Analyst
Joe Rodriguez, Staff Attorney
Please refer to
Appendix 1 and 2 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting on November 9th
and 10th, respectively.
Cochairman Peck called the meeting to order at 8:30 a.m.. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 3 to review the Committee Meeting Agenda.
After some discussion regarding insertion of members names on a second to a motion, the minutes were approved, without amendment.
Senator Mockler presented the history of the Task Force on Intangible Property, explained the activities of the Task Force, and summarized the recommendations of the Task Force in the form of four recommended bills. (See Appendix 4 for a copy of the draft report, including a copy of all legislation from which the Committee worked.)
06LSO-0170.W1, Intangible property-definition of real property. Senator Mockler moved the draft legislation. The motion was seconded, and motion passed by roll call vote. The Committee decided to approve the bill as a Senate file. (See Appendix 5 for a copy of the roll call vote.)
06LSO-0169.W2, Property taxation-intangibles for 2006. Senator Mockler moved 06LSO-0169.W2 to be introduced as a Senate file. The motion was seconded, and after discussion, the motion passed by roll call vote. (See Appendix 6 for a copy of the roll call vote.)
06LSO-0167.W5, Intangible property definitions. Senator Mockler explained the draft, as recommended by the Task Force.
Liz Zerga, Alltel Communications, stated that Wyoming statute exempts intangible personal property. The statutory list has been deemed by the Court to not be exclusive. She recounted the history of the issue for the Committee. Ms. Zerga stated that the tax reduction was approximately $2.5 million in 2005 due to implementation of an expanded definition, according to the Department of Revenue. She also pointed out that the purpose of moving toward a list, as included in the draft bill, was to remove questionable items.
Ms. Zerga pointed out that the Task Force modification to “goodwill” - that it's shown on the books and records of a company - limits the potential exemption for companies since goodwill generally appears on books and records only when companies happen to have purchased or sold a business. She urged the Committee to delete the restriction on goodwill.
Senator Peck moved to add “or as affirmed by generally accepted accounting standards” after "records" on page 2, line 41. The motion was seconded.
The Committee then discussed what limitations on goodwill would be appropriate. After some discussion, and approval of Senator Peck and the second, the insertion language was revised to read, "or as affirmed by generally accepted accounting or appraisal principles". The motion passed.
Upon suggestion by Tom Jones, National Federation of
Independent Businesses (NFIB), Senator Mockler moved to replace “an individual”
with “a person” on page 3, line 29. The motion was seconded, and it passed.
Senator Mockler moved the draft; it was seconded. A roll call vote was called on the draft to be introduced in the Senate and it passed. (See Appendix 7 for a copy of the roll call vote.)
06LSO-0168.W2, Intangible property-taxation. Ed Schmidt, Director, Department of Revenue, provided the Committee with an explanation of the legislation and the proposed method to provide an intangible exemption by percentage for each industry, as used in Montana. Wade Hall, Ad Valorem Tax Administrator, Department of Revenue, provided a preliminary, hypothetical fiscal impact of the proposal. (See Appendix 8.) Director Schmidt cautioned that the percentages used in the fiscal example in future years may be quite different.
Ken Uhrich, Ad Valorem Tax Division, Department of Revenue, explained that rail cars are assessed by a method other than by the unitary income approach and that the collection of the tax is also different. After discussion, the Committee agreed that “rail car companies” should be removed. LSO staff indicated that it would be eliminated as part of the clean-up of the language, since the Task Force had not specifically inserted that language.
Director Schmidt suggested that for purposes of administration, assessment of intangibles would require some additional work. The Department would have to promulgate rules to treat all companies within a minor industry similarly. He added that companies would still have an opportunity to appeal. Director Schmidt suggested that the "Montana solution" provides a safe harbor, even for those companies that cannot justify an exemption. However, if an opt out provision is included, the situation basically devolves back to treating all companies individually, according to Director Schmidt.
The Committee discussed whether individual companies should be treated similarly within each industry or be treated individually.
Alec Vincent, Burlington Northern Sante Fe (BNSF), suggested that the draft provides an opportunity for ease of administration for the Department, but industry is willing to come to the Department individually, which could result in conflicts and, potentially, litigation. Therefore, according to Mr. Vincent, this draft could provide for some dispute resolution.
Mr. Vincent proposed that on page 2, line 37, the language "as provided by" be changed to "as accepted by". Furthermore, Mr. Vincent noted that the language on page 2, line 44 requires the Department to rehash these issues every two years, which does not reduce much administrative burden. In lieu of that language, he would suggest the Department provide a report to the Joint Revenue Committee discussing whether this approach has worked or not. The industry needs to carry the burden of proof. He provided the Committee suggested language to allow an alternative for companies to opt out of the standard percentages. (See Appendix 9 for the proposed amendment language.)
Don Boehm, Basin Electric Power Company, suggested that most entities have a great working relationship with the Department of Revenue and work out issues of contention prior to litigation.
Senator Mockler asked why the court wouldn’t throw out the whole system if it fails to arrive at fair market value of property. In response, Casey Parker, Senior Assistant Attorney General, cited a case with Basin Electric in which it was treated differently and the Supreme Court indicated that was not allowed. A percentage system by industry has been permitted by the Supreme Court. She indicated that if the desire is to avoid this challenge, it is simple enough for the Legislature to allow only a percentage of intangibles.
Richard Heltzer, El Paso Corporation, stated that industry should be given an opportunity to prove up the percentages and not give up their right to appeal in the future. He supports the bill if industry can come in to prove up the percentages.
Liz Zerga, Alltel, stated that the individual taxpayer cannot appeal later without the proposed amendment, other than an appeal through rulemaking.
Senator Peck moved the bill and it was seconded.
Senator Peck moved on page 2 line 43, after "deduction" delete “shall be utilized” and insert "The Department shall provide a report to the Joint Revenue Committee after two years reviewing the effectiveness of the procedures outlined. The Legislature shall take appropriate action based on a fair assessment of the report and its substance.” The Committee then discussed proper placement of general reporting language in a separate section, rather than the specific language offered on page 2, line 43. That course was agreed to; and the motion was seconded. The amendment passed.
Representative Walsh proposed an amendment to page 2, line 37 to replace “provided by department rule and regulation” and replace it with “accepted by the department”. The motion was seconded and it passed.
Senator Peck moved to add paragraph (vi) as the proposed amendment by Alec Vincent (Appendix 9). The motion was seconded, and it passed.
Roll was called on the bill as a Senate file. The bill passed. (See Appendix 10 for a copy of the roll call vote.)
Assessment of Telecommunications Companies. Liz Zerga, Alltel Communications, and Jody Levin, Qwest Communications, presented a proposal to place all telecommunications, including cellular companies, in the locally assessed commercial classification. Ms. Zerga noted that the companies are generally not regulated by the Public Service Commission. She stated that internet service providers and cable companies are locally assessed. In short, part of the competitors to Alltel and Qwest are assessed at 9.5 percent while others are assessed at 11.5 percent. Ms. Levin indicated that the Task Force heard testimony on this issue but did not forward any recommendations on the change in classification. (See Appendix 11 for a copy of the draft proposal.)
Senator Mockler explained the history of the Task Force's charge and indicated that the issue is complex and the Revenue Committee, this interim, may not necessarily be the appropriate forum. Representative Anderson suggested that it could be addressed through interim study directed by Management Council or through a Task Force.
Brenda Arnold, Laramie County Assessor, indicated the taxation of telecommunications does need to be addressed. She indicated that it is worthy of interim study and that changes in the definition of “telecommunications” are only about five years old. She also articulated a variety of issues that could be explored including local assessment, level of assessment, e.g., 9.5 or 11.5 percent, availability of appropriate assessment tools at the local level, appeal rights, fiscal impacts, and comparisons of other property based upon net book value.
Senator Mockler moved to draft a bill creating a Task Force to study the last three issues charged to the Intangible Property Task Force and include an appropriation of $25,000. The motion was seconded and a voice vote passed to conduct a postcard ballot of Committee membership upon drafting by staff.
Bruce Hinchey, Executive Director, Petroleum Association of Wyoming, provided a progress report on the negotiations of the methods of valuation. Jointly, Mr. Hinchey and Director Schmidt presented draft legislation to address the concerns of industry and the Department, with two alternatives. (See Appendix 12)
Director Schmidt explained the bill including the establishment of a rate of return of 10.25 percent in an effort to recognize the investment to process natural gas. Mr. Hinchey indicated that the draft does not define “processing facility” since agreement could not be reached and the issue had undergone litigation. He indicated the court resolved that issue and provides the Department with a definition of “processing facility.” Director Schmidt explained the definition of gross capital investment and depreciation. Next, Director Schmidt walked the Committee through subsection (E) which provides the methodology for a modified netback method. Included are a single point of valuation and a minimum fair market value.
Finally, Director Schmidt outlined two different alternatives: alternative one is the industry’s position and alternative two is the Department’s position. Mr. Hinchey agreed this is an issue on which industry and the Department could not come to resolution. Mr. Hinchey indicated that industry feels strongly that the netback method should be applied to all producer processed gas to insure stability in the system. Director Schmidt pointed out that comparable value has been allowed since the 1990s and has been used in all instances where possible. The Department desires to continue to have this option. He indicated that the Department had applied the proportionate profits method, which works well in a low price environment. The Supreme Court and the Board of Equalization upheld the use of comparable value at one plant. He indicated he would be remiss to allow that Court decision not to stand. Taking away this option would be very damaging to the state and the counties and was one of the reasons the Governor vetoed 2003 HB 87.
Director Schmidt indicated that in the event that alternative two is not selected, the Department would have to withdraw its support for the bill.
The Committee then discussed options to reconcile the differences and how to select the best alternative.
Director Schmidt passed out a chart (Appendix 13) which compares the fiscal impacts of various valuation methods at different production prices. The netback method will generate more revenue than any method at prices higher than the current price, as suggested by the chart, according to Craig Grenvik, Administrator, Mineral Tax Division. Director Schmidt added that the current valuation method could not be divided between comparable value and proportionate profits for reasons of confidentiality.
Todd Ennenga, Devon Energy, stated his support for the Department of Revenue’s alternative as a company that would be hindered by netback valuation. Devin Energy would like the option for the Department to use comparable value.
Anthony Fasone, Burlington Resources, indicated that perhaps industry could work on the definition of comparable value and continue to allow the Department to have the option of selecting either modified netback or comparable value. He indicated that Burlington Resources would support the bill either way and indicated that the bill results in an increase in taxes for several producers.
Chris Chambers, Chevron, indicated that his company is being valued using the comparable value method and prefers one option. With respect to the chart, Chevron does not want to be in a position where the Department can choose between netback and comparable value, depending upon the pricing situation.
Joe Evans, Wyoming County Commissioners Association, expressed his support for the second of the alternatives, or the Department’s position. Scott Harnsberger, Fremont County Commission, indicated it is the charge of elected officials to identify market value, not high value. On behalf of counties, he urged the Department be allowed to determine fair market value.
Sarah Gorin, Equality State Policy Center, provided a handout (Appendix 14) which she indicated was from a presentation to the Select Committee on Mineral Valuation a couple of years prior. The handout indicates that the proportionate profits method provides the most stable taxable value over time. Ms. Gorin suggested the Department needs the ability to choose the valuation method or risk not being constitutional. She also asked the Joint Revenue Committee to meet again and allow a thorough review of the bill prior to the Session.
Randy Bolles, Wyoming Taxpayers Association, stated that the Wyoming Constitution requires full value, not fair market value. Based on his experience, he urged the Committee to move forward since, in his opinion, something needs to change in order for improvement to occur.
Cochairman Peck laid consideration of the draft back until November 10th at 11:30 a.m.
Dan Noble, Administrator, Excise Tax Division, Department of Revenue, provided an explanation of 06LSO-0090.W3 (Appendix 15), which affirms if a well is deepened or extended it would qualify for the same sales tax exemption currently in statute.
Mr. Hinchey indicated this situation is not a huge problem in the state and hopefully this draft will clarify the issue.
Representative Walsh moved the draft as a House bill, and the motion was seconded. The motion passed on a roll call vote. (See Appendix 16 for a copy of the roll call vote.)
Dan Noble provided the Committee with a decision letter regarding a motion for summary judgment in the case between Woodworker’s Supply and the State of Wyoming. (Appendix 17) He stated that the DOR rules were challenged in court and noted that Judge Grant indicated that “It is possible for a company to pass title in Wyoming, but possession not to pass until it reaches another state. Under the old sourcing rules, this type of transaction meant that Wyoming sales tax would be due; however, the new sourcing rule disregards the possibility of title transferring before possession. This creates a discrepancy within the current and old sourcing rules. This discrepancy violates State law.”
Therefore, the Department must determine when title is transferred and what constitutes passage of title. Mr. Noble asked the Committee if it desires to incorporate the sourcing rules of the Streamlined Sales Tax Agreement (SSTA) as well as propose a clean-up issue for bad debt, particularly in cases of installment payments. Mr. Noble added that without the sourcing rules, Wyoming is not in compliance with the SSTA.
Mr. Noble explained 06LSO-0282.W1, Streamlined Sales Tax. (See Appendix 18) According to Mr. Noble, the bill moves the sourcing parameters, previously eluded to by reference, into statute.
After discussion, Senator Mockler moved to adopt the draft as a Committee bill to be introduced in the House. The motion was seconded, and it passed on a roll call vote. (See Appendix 19 for copy of the roll call vote.)
Wade Hall, Administrator, Ad Valorem Tax Division, Department of Revenue, provided the Committee with a report on the property tax relief program. (See Appendix 20.) He indicated that the balance remaining from the existing appropriation is approximately $4.6 million.
The Committee discussed the criteria in place in tax year 2003 and the new criteria put in place for 2004. The Committee noted that the program has been less expansive than originally expected and discussed what parameters might be changed to increase participation. Mr. Hall stated that notice of the program is provided on all tax notices, and a fair amount of advertising is being done.
Kim Lovett, Laramie County Treasurer, indicated that her county’s numbers have dropped from 2003 to 2004. Ms. Lovett indicated that the criteria are quite liberal.
There being no further business, Cochairman Anderson adjourned the Committee at 4:30 p.m.
Cochairman Peck called the meeting to order at 8:35 a.m.
John Cox, Director, Department of Transportation (DOT), addressed the Committee and indicated that DOT has submitted its budget to the Governor, requesting $155 million to address deficits in highways not eligible for federal highway funds. The request does not address multi-lane highway funding. Director Cox also indicated that DOT has prepared a report on the use of the $11 million appropriation from last year.
Del McOmie, Chief Engineer, DOT, summarized the projects to be pursued using the Legislative appropriation from the 2005 Budget Session as well as the impacts of inflation on DOT.
The Committee discussed the recent requests as a shift in the philosophy of funding for DOT. Mr. McOmie indicated DOT realizes that the Legislature will be considering the appropriation every biennium and have an opportunity for continuity, but he realizes if hard times come that DOT may not receive funds. He added that DOT is asking for $1.47 billion, but they realize that funding may not always be available. Mr. McOmie also provided the Committee with a page of draft amendments for the package of multi-lane funding bills. (See Appendix 21.)
06LSO-0092.W2, Multi-lane highways-funding. (See Appendix 22 for a copy of the draft.) Representative Walsh moved the draft, and the motion was seconded.
Representative Anderson moved that on page 1, line 20 after 211(g) insert ”to be expended for the purposes of construction and maintaining multi-lane highways in this state, enhancing safety, mobility and sustainable growth.” The motion was seconded.
Mr. McOmie indicated the first part of the phrase is for consistency with other Committee bills and the second is to state the obvious to assist with purposes of NEPA.
Senator Mockler moved to revise the language “facilitate economic and population growth” rather than sustainable growth.” The new words would read, “to be expended for the purposes of construction and maintaining multi-lane highways in this state, enhancing safety and mobility and facilitating economic and population growth.” The motion to amend the amendment was seconded and it passed. The amendment passed.
The Committee voted on the bill, and it passed as a House bill by roll call vote. (See Appendix 23 for a copy of the roll call vote.)
06LSO-0225.W1, Severance tax cap-increase. Representative Anderson moved the bill and Representative Walsh seconded the motion. (See Appendix 24 for a copy of the draft.) Dean Temte, LSO provided a handout of the fiscal impacts of this draft legislation and LSO-0226.W1. (See Appendix 25.) Mr. Temte explained the fiscal impacts to the Committee.
Joe Evans, Wyoming County Commission Association, expressed the counties' support for the increase in the caps. The amount of increase is divided about 75 percent to municipalities and 25 percent to counties. He noted in other areas, counties have been working to achieve a 70/30 split.
George Parks, Wyoming Association of Municipalities, indicated that WAM supports raising the caps and these bills provide the Legislature options for the upcoming Budget Session. The combination of the severance tax and federal mineral royalty (FMR) bills would increase revenues by $8.8 million to municipalities. He added that WAM membership would like to see a permanent change in revenue distribution from the state.
Laurie Kadrich, City of Cody, spoke in support of the bill. She indicated Cody prefers money that is not earmarked for capital construction.
Jonathon Downing, Wyoming Contractors Association, expressed support for the Committee's forward thinking approach. He explained that the state is now doing less work with the same amount of money. He also recounted examples of struggling contractor businesses in Wyoming.
Marion Loomis, Wyoming Mining Association, indicated his association supports the multi-lane funding efforts. Since 1990, according to CREG, the state has directed about $1.1 billion toward roads. He also pointed out the current statute requires road development funded by federal mineral royalties should be spent in areas that are impacted by extraction.
The Committee discussed the beginnings of the earmarking discussion. They also discussed the change in the caps and whether the bill might be time limited for two years. Finally, the Committee discussed whether across-the-board funding with respect to severance and FMR formulas for municipalities allows for targeting.
Representative Anderson moved to insert on page 4, line 41 after "state", “enhancing safety and mobility and facilitating sustainable growth.” The motion was seconded. The motion passed.
A roll call vote was taken on the bill and it passed as a House bill. (See Appendix 26 for a copy of the roll call vote.)
06LSO-0226.W1, Federal mineral royalty cap-increase. Dean Temte, LSO, provided an explanation of the bill and its fiscal impact. Representative Anderson moved the bill, and it was seconded. (See Appendix 27 for a copy of the draft legislation.)
Representative Anderson moved the suggested DOT amendment (Appendix 19), with changes as proposed in the last line of the previous amendment: “the additional funds provided by this bill will be distributed to an account within the highway fund to be designated as the multi-lane highway funding account, to be expended for the purposes of construction and maintaining multi-lane highways in this state, enhancing safety and mobility and facilitating sustainable growth.” The amendment was seconded. Kevin Hibbard, DOT, indicated that the amendment applies only to the 26.25 percent and not the other three FMR revenue streams received by DOT.
After Committee discussion, the amendment failed.
A roll call was taken and the bill passed as a House bill. (See Appendix 28 for a copy of the roll call vote.)
Dixie Huxtable, President of the Wyoming County Assessor’s Association, requested that the Department insert a budget request for the CAMA system; additional costs for the counties in implementing the new CAMA system including training and production costs. She asked for the Committee’s support for the exception budget request, likely to be approximately $1 million.
Director Schmidt, noted that the Department is not asking for formal action from the Committee.
Wade Hall, Department of Revenue, provided the Committee with an illustration of the implementation progress of the CAMA system, by county. He indicated that during the transition there have been a total of four different systems operating throughout the state. He indicated that the software is a proven platform working in a number of jurisdictions. Ms. Huxtable indicated that the system gives assessors more tools to explain a tax assessment to taxpayers.
Dan Noble, Excise Tax Administrator, Department of Revenue, presented the Committee with background regarding sales by a contractor that also acts as the installer. (See proposed language in Appendix 29) Labor is not taxable and the good is. The proposed draft clarifies and simplifies this issue. He indicated that in many of the audits, businesses do not understand that they may be acting as a manufacturer, installer, and retailer and there are difficult accounting issues. If the installation service is provided with the product, the tax is on the contractor not on the customer. By offering the option included in the draft proposal, it allows businesses to act as they desire. In terms of an educational effort, the Department will need to advertise to the contractors' association and others. Mr. Noble stated the bill would apply only to contractors who desire to sell goods at retail, and therefore be licensed.
Senator Mockler moved the Department of Revenue’s proposal and it was seconded. Senator Cooper moved to strike lines 11 and 13, through “If” and insert “When the contractor-retailer contracts to bill the material and labor separately, he must charge sales tax on the price of all materials. When” The motion was seconded. The motion on the amendment passed.
Mark Quiner, LSO, noted that identical language from the draft would be required in the use tax language in W.S 39-16-303(c). The Committee concurred.
A roll call vote on the bill was taken and the bill passed as a House bill. (See Appendix 30 for a copy of the roll call vote.)
06LSO-0280.W1, Sales and use tax exemptions – farm implements. (See Appendix 31 for a copy of the draft.) Dan Noble explained the draft and indicated that if it is the intent of the Committee to include only those items typically considered farm implements, then definitional changes are needed. Specifically, lines three and four of page two provides further clarifying language. Importantly, the term “adapted” is being removed.
Scott Zimmerman, Rocky Mountain Farm Machinery, indicated his preference for not including a full list of farm implements in statute. He also raised an example of a loader with an attachment exclusively for loading bales of hay.
Tom Jones, Far West Equipment Dealers, requested that the Committee not undertake a bill at this time.
Senator Mockler suggested the list could be removed. Senator Mockler moved the bill and the motion was seconded. The motion on the bill failed with a roll call vote of 3 ayes and 6 nays. (See Appendix 32 for a copy of the roll call vote.)
Payment plans for sales tax due on vehicles. For purposes of information only, Mr. Noble explained that current statute provides for the Department to make available installment plans for the payment of certain taxes. There are currently approximately 25 plans outstanding and a couple are in default. Mr. Noble suggested that the Department is becoming a financing institution.
Marsha Allen, Automobile Dealers Association, indicated that dealers will include sales tax in the finance package, but the dealers cannot pay the tax. Rather, automobile dealers must provide a check to the customer for payment of taxes owed.
Mark Quiner, LSO, explained the newly drafted bill to the Committee, 06LSO-0287.W1, Natural gas valuation. (See Appendix 33.) Representative Anderson moved the bill and it was seconded.
The Committee discussed both alternatives: the one favored by the Department and the one favored by many in industry.
Director Schmidt urged the Committee to support alternative two. He questioned why comparable value should be removed from the statutes as an option. He recounted the State Board of Equalization and Supreme Court’s affirmation of the comparable value methodology for comparable value. Director Schmidt urged the Committee to allow presentation of company and processing plant information in executive session.
Craig Grenvik, Department of Revenue, provided an illustration of a company ownership of plant production and how it can affect the identification of market value of gas. He added comparable value considers market transactions and other methods provide a proxy of what the market for natural gas might be.
Larry Wolf, Holland and Hart, explained that it is a company specific decision as to which methodology is preferred. He stated that in high price times netback generates high revenues. If prices continue to be $5 per mcf or above, the state will generate more revenue under the netback method. He also suggested a proposal to provide an alternative for the Department to provide notice of selection of method.
Sarah Gorin, Equality State Policy Center, indicated that the state does not need a bill at this time and urged the Committee to select option 2, if a bill does move forward. She urged the Committee to add a reporting requirement, including what method is used, taxes paid, and points of litigation.
John McKinley, County Attorney for Sublette County, indicated that it is important to leave the Department with some flexibility. He cautioned that depending upon the way the language is crafted, it may be 2009 before netback could be used.
Brent Kunz, representing Exxon Mobile, urged the Committee to do nothing. He added it is not appropriate to have the Committee review company tax returns. He stated Exxon Mobile prefers comparable value under alternative two, for the record.
Senator Mockler moved alternative two amended with the addition of a separate section stating, “By October 1, 2008, the department shall report to the Joint Interim Revenue Committee on the operation of the netback method, the taxable values generated by the netback method and compare the taxable values generated by the netback method with those that would have been generated by use of the comparable value method and proportionate profits method.”
The motion was seconded and it passed. A roll call vote was taken on the bill, and it was adopted as a House bill. (See Appendix 34 for a recording of the roll call vote.)
Wade Hall, Department of Revenue, described a situation not under appeal whereby a portion of agriculture land is being used by outfitters and assessed as commercial rather than falling under the agriculture treatment, which provides assessment based on productive agriculture capacity. The Committee discussed several hypothetical situations of outfitting, shooting ranges, dude ranches, under a variety of different circumstances.
Steve Sommers, LSO, provided the Committee with an update of the October 2005 CREG forecast. He indicated that all three major sources (sales tax, severance tax, and investment income) of revenue to the General Fund have been increased. He stated that the equity portion of the PWMTF will only return approximately 1.9 percent and the total investment return for the PWMTF is about three to four percent. Little change was made to the other miscellaneous revenue sources. With respect to severance taxes, 70 percent results from natural gas. He summarized the current price environment for natural gas, oil, and coal.
Next, Mr. Sommers walked the Committee through the state's profile, or "goldenrod" and stressed that even the carryover figure for the 05-06 biennium is not currently available. It is an estimate. With respect to the School Foundation Program (SFP), he noted that there should be enough to cover recalibration and fund the Hathaway scholarship program in FY07-08, if the law is not changed, and leave a little on the table. He stressed the volatility of the SFP as it is tied to assessed valuation program.
Dave Lerner, Internet Company business owner, illustrated, by example, that when a business has no tax liability, the information sent by the Department of Revenue comes at some cost. (See Appendix 35.) He asked what research has been done based upon a bill considered in the House last year.
Dan Noble, Department of Revenue, indicated that contrary to previous statement, further assessment has revealed that Colorado does not have a de-minimus law. Mr. Noble discussed the availability of quarterly billing or Internet payment. He recognized that there is an administrative burden to send out the billing, but suggested it is difficult to determine where to draw the line with respect to tax liability.
Mark Quiner, LSO, provided the Committee a handout (Appendix 36) relating to issues addressed previously by the Committee, at the request of the author, James Patterson.
There being no further business, Cochairman Anderson adjourned the meeting at 2:30 p.m..
Respectfully submitted,
Senator Peck, Cochairman Representative Anderson, Cochairman