Task Force Meeting Information

November 28, 2006

302 Capitol Building

Cheyenne, Wyoming

 

Task Force Members Present

Senator E. Jayne Mockler, Chairman

Senator Curt Meier

Representative Rodney "Pete" Anderson

Representative John M. Hastert

Representative Thomas E. Lubnau II

 

Task Force Members Absent

Senator Robert A. Peck

Representative Gerald Gay

 

 

Legislative Service Office Staff

Mark Quiner, Assistant Director

Don Richards, Senior Research Analyst

 

 

Others Present at Meeting

Please refer to Appendix 1 to review the Task Force Sign-in Sheet
for a list of other individuals who attended the meeting.

 

Executive Summary

The State Assessed Property Task Force met on November 28th in Cheyenne to discuss 07LSO-0123.W2, State assessed property.  After public comment, the Task Force agreed to recommend to the Joint Revenue Interim Committee to revise current statutes in order to require all communications companies be assessed at the state level at the rate of 9.5 percent.

Call To Order

Chair Mockler called the meeting to order at approximately 8:30 a.m.  Senator Meier moved for approval of the minutes from the June 27th meeting.  The motion was seconded and passed without objection.  Please refer to Appendix 2 to review the Task Force meeting agenda.

 

07LSO-0123.W2, State assessed property. 

Chair Mockler described the options provided for within the draft legislation and noted that the accompanying LSO Fact Sheet provides a fiscal estimate of each of the provisions found in the bill.  (See Appendix 3.)  Chair Mockler explained that the first choice in the draft legislation subjects all communications businesses to state assessment at the assessment rate of 9.5 percent.  The second choice moves all communications companies into state assessment at the rate of 11.5 percent.  The third and fourth choices exempt telecommunication and all cable services (and rentals) from sales taxes.  The Task Force members discussed the various options and whether there should be a consideration to hold local governments harmless from the potential reduction in revenue.

 

Public Comment

Erin Taylor, Wyoming Taxpayers Association, addressed the Task Force and spoke in support of equality in the tax system.  Ms. Taylor provided a handout describing a similar discussion regarding property taxation occurring in Oregon.  (See Appendix 4.)

 

Dave Johnson, Wyoming Association of Municipalities, spoke against the sales tax exemption, citing the financial impact to municipalities.

 

Liz Zerga, Alltel Wireless, indicated the preference of her company is to move telecommunications businesses to the 9.5 percent assessment rate and suggested she would not object to continue state assessment.  She suggested that the burden of her business sector on government, through the new use of technology, has been reduced and that her business sector is more comparable to the commercial sector.  The telecommunications industry, e.g., voice over Internet protocol (VOIP) and cellular, are less capital intensive than traditional telecommunication service providers, according to Ms. Zerga.  She explained that more services are being provided through the use of less assets.  Ms. Zerga stressed the need for equity and noted that the cable and satellite companies' customers do not pay sales tax on all services.  Responding to questions, she noted that the Oregon discussion revolves around property taxation.

 

Responding to questions, Wade Hall, Ad Valorem Tax Administrator, Department of Revenue, indicated that the Department selects the assessment approach that gives the best indication of value when it comes to state assessments.  He added that local assessors would likely rely more heavily on the cost approach, and the state would at least consider the income approach.  He reminded the Task Force members that the Department now uses methods to deduct the value of the intangible assets.   Mr. Hall noted that common attributes of state assessed companies include operation across jurisdictional boundaries.  He also discussed historic distinctions regarding one-to-one versus one-to-many communications.  Mr. Hall added that there currently are no state assessed properties which are subject to the 9.5 percent assessment rate.

 

Responding to questions, Dan Noble, Excise Tax Administrator, Department of Revenue, indicated that a lot of the inequities are definitional in nature.  He explained that data services are not subject to sales tax but telecommunications services are subject to sales tax, including VOIP.  He suggested that if a taxpayer bundles taxable and nontaxable services, then the service is taxable.  He indicated that telecommunication service is the transmission of voice while the transmission of data is considered data services.  However, technology has muddied that water, according to Mr. Noble.  He also noted that cable services are not subject to sales tax.

 

Representative Lubnau asked if the definition distinctions makes sense.  Mr. Noble responded that the current set of definitions are, in part, due to the federal Internet moratorium on taxation.  He explained that Wyoming does not tax Internet service provision or data services.  The Task Force discussed whether the Streamlined Sales Tax discussion would be appropriately placed with the Joint Revenue Committee.

 

Responding to questions of the Task Force, Brenda Arnold, Laramie County Assessor,  reiterated that the county assessors have the ability to use all three assessment approaches, but local assessors could not use the income approach to value just cable services based on an historical ruling.  Further, the counties don’t have the appropriate information to conduct an income approach, according to Ms. Arnold.  She indicated that the County Assessors support assessing all communications property at the state level.

 

Stacie Sprinkle, Verizon Wireless, urged the Task Force to move the wireless industry to the 9.5 percent assessment rate, and her company would not object to being state assessed.  She also discussed some of the developments in Oregon and noted that there is no difference in assessment rates in that state

 

Ms. Arnold suggested that classification of industrial property partially relates to whether a business actually transforms the inputs into the business’s outputs.  Those that do, traditionally, have been considered industrial properties, according to Ms. Arnold.  The Committee discussed whether these issues present inequities. 

 

Committee Action

Senator Meier proposed to forward a draft recommendation to tax all communications businesses (telecommunications, cable and satellite services) at 11.5 percent; assess them at state level; and remove any changes to the sales tax statutes in the draft bill.  There was no second to the motion.  Senator Meier moved an alternative motion to forward a draft recommendation to tax all communications businesses at 9.5 percent; assess them at the state level; and remove any changes to the sales tax statutes in the draft bill.  The motion was seconded and it passed.  LSO staff noted that the motion essentially removes all portions of the draft except for Section 1.

 

Chair Mockler directed LSO staff to prepare and provide a copy of the report to be submitted to the Joint Revenue Interim Committee to all members of the Task Force prior to submitting it to the Revenue Committee.

 

Meeting Adjournment

There being no further business, Chairman Mockler adjourned the meeting at approximately 10:00 a.m.

 

Respectfully submitted,

 

 

 

Senator Mockler, Chair

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