SHERIDAN — The Joint Revenue Committee will consider allowing local governments throughout the state to create their own revenue options through the implementation of local taxes during its interim meeting next month. 

Revenue Committee House Chair Rep. Mike Madden, R-Sheridan, said the Management Council directed the Joint Revenue Committee to consider allowing local municipalities in the state to implement local tax options as a way to replace the direct distribution funds the state provides.

“They are looking ahead, and they are saying there is going to be a time where we don’t have these direct distributions coming back to local governments anymore,” Madden said.

During the 2018 budget session, the Legislature authorized the state to disperse $105 million in direct distribution funding among local governments over the next biennium.

Rich Kaysen, the executive director of the Wyoming Association of Municipalities, said his organization has been pushing for the Legislature to allow municipalities to create their own tax options for the past few years. WAM released two municipal finance reports that determined Wyoming municipalities are more dependent on state aid than the municipalities in every other state in the country.

“When times are very, very good, and Wyoming has had some great years, then that works well,” Kaysen said. “But when there are troublesome years, when the economy has a downturn, we understand the state can’t print money, then municipal governments’ hands are somewhat tied.”

Rep. Mark Kinner, R-Sheridan, who serves on the Joint Revenue Committee noted that the committee has considered this issue before, during the 2017 general legislative session, but chose not to allow local governments to create their own taxes. 

“The downside would be, if there is a downside, that local people may end up having to pay more,” Kinner said. “The question becomes, do local taxpayers want to help fund the city and county governments?”

Kinner said if the state does allow for local tax options, he would hope their implementation is left up to local voters. Kaysen said that was the intention. 

“The idea here is to take tax initiative proposals to the voters to see what the voters may say on that,” Kaysen said.

Because direct distribution funds need to be approved by the Legislature each biennium, they cannot be applied to ongoing payments like salaries or employee benefits. Generally, they are used for one-time infrastructure expenses. In Sheridan, for instance, direct distribution funds have been used to remodel the police station and city hall, replace emergency vehicles, purchase snow removal equipment and improve city parks and streets.

Even if the Legislature allows municipalities to create their own revenue options, it will most likely still need to maintain some level of direct distribution funding.

Cities like Sheridan have numerous retail businesses and a sizeable tax base, which means local taxes in those cities would likely be profitable. Smaller cities like Clearmont, though, have much smaller tax bases and would likely struggle to generate enough tax revenue to make up for the loss of direct distribution funding.

“If we’re going to have supplemental funding, it will probably have to be focused on smaller towns,” Madden said. “But then the devil is in the details. How small does the town have to be before they can participate? There’s no one-size-fits-all.”

Madden explained that some towns have a reasonably-sized population but do not have much of a retail sales base, so population alone cannot determine their funding.

The Joint Revenue Committee will meet June 4 and 5 in Riverton.