Monday, February 12, 2018

Tax Hikers Have Not Given Up

Our legislators kick off today. Due to the threat of major tax increases, this is the most important session in recent Wyoming history. With an economy in a state of fragile stability after a very tough downturn, a pile of tax hikes will throw us right down into the hole again.

We the taxpayers won an important battle when the Revenue Committee killed the Taxmageddon package before the session. It was a big victory in the sense that those tax bills do not have committee backing; it will be harder and more bureaucratic for the statists to get them through as individually sponsored bills. 

That, however, does not mean we can rest on our laurels. The legislative statists will try again. There are two big parts of their strategy, the totality of which is aimed at wearing down our resistance and circumventing formal rules against rushing fiscally disruptive bills through the legislative process.

The first step is, as mentioned, to introduce tax hikes as individual bills, with the hope that the fragmented approach will fly under our radar. As a first warning of what that strategy looks like, consider the list below, provided by Sam, an avid blog reader, on the Facebook group Wyoming Prosperity (including bill sponsors):
HB0043 Tobacco tax. Revenue

HB0044 Alcoholic liquors markup amount. Revenue
HB0051 Reporting of gross receipts. Revenue
HB0080 Coal reclamation fee. Zwonitzer
HB0085 Motor vehicle sales tax-collection by dealers. Larsen
HB0098 Real estate transfer tax. Schwartz
HB0104 Wind energy production tax. Madden
Sam also mentions SF0040, which is the "Commercial air service improvement" bill sponsored by Senator Von Flatern, This, as Sam notes, is the WyoFlot bill. It is important to keep an eye on this bill - and pray for its demise - for two reasons: it would get Wyoming taxpayers on the hook for tens of millions of dollars in subsidies to commercial air service; and it would set a very bad precedent for other so-called economic development projects in the future, again courtesy of taxpayers.

Before we get to the second part of the tax-hiker strategy to get more of our money, let us note a tax related bill that actually brings something positive to the table (also on Sam's list): HJ0007 Taxpayer's bill of rights (TABOR) by Representative Gray. This bill is apparently inspired by the national TABOR movement, and specifically the Colorado version. 

I like Representative Gray, he is a hard working, fiercely conservative legislator with a great future. (If you want to make an investment, buy up as many "Chuck Gray for Governor" web domains as you can. Eight years from now, they are going to be worth a lot of money.) Since he was elected in 2016, he has been a champion of ideas that make Wyoming a better place to live and do business. 

The substance of the TABOR bill is to force the legislature to seek taxpayers' approval before raising taxes or borrowing money for the state. This is effectively a debt ceiling, but far better than the one we thought we had on the federal government. Since it extends to local governments, it could actually have some teeth.

I have two small problems with Representative Gray's bill. First, when the legislature seeks voter approval to raise taxes, it has to specify the reason. Whatever tax revenue is left after the legislature has spent funds as promised, shall be refunded. So far, no problem. The problem comes with the refund mechanism, which is not very specific. There may be statutes that define a refund and makes it redundant to repeat it here, but I think Representative Gray could improve his bill a little bit here. 

Secondly, overall the bill is complicated. It almost feels like throwing red meat to the lawyers. However, in Representative Gray's defense, this is not an easy subject to deal with. To explain, I will write a separate piece later this week on TABOR and other budget-balancing mechanisms.

Now for the second part of the strategy that our beloved legislative statists will probably employ to get their tax hikes through. 

Special session.

I know a lot of people are skeptical about this - if there were plans for a special session, they would know about it - but to the statist, it is a perfectly logical solution. You need a two-thirds majority to pass a tax-increase bill in a budget session, but only a simple majority in a special session. Therefore, I would suggest that under strictly specific conditions, Governor Mead is going to call a special session during, or right at the end of, this budget session (with the end of the budget session being the most likely option). 

The strict condition for whether or not there is a need for the special session is the fate of the first three bills on Sam's list: HB0043 and HB0044 raise addiction taxes, while HB0051 opens the door for the Gross Receipts Tax. These are all sponsored by the Revenue Committee, which gives them special treatment during the legislative session. 

If these three bills pass smoothly through the House, the risk of a special session is lower. If, on the other hand, committee-sponsored tax hikes run into major obstacles, the Special Session - a Wyoming version of the Congressional "nuclear option" - is suddenly much more likely.

It may seem like a long way to go before we would risk a special session. In theory, it is, and it may not even happen if the statists come to their senses. However, time flies fast once the circus opens. Be vigilant and make sure to visit the legislature's bill tracking website at least twice a day.

No comments:

Post a Comment