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Joint Corporations Minutes Draft Only Approval Pending of SUMMARY P ROCEEDINGS JOINT REVENUE COMMITTEE COMM ITTEE M EETING I NFORMATION September 22-23, 2016 Hampton Inn Buffalo, Wyoming COMM ITTEE M EM BERS PRESENT Senator R. Ray Peterson, Co-chairman Representative Michael Madden, Co-chairman Senator Cale Case Senator Ogden Driskill Senator Dave Kinskey Representative Jim Blackburn Representative JoAnn Dayton Representative Roy Edwards Representative Mark Jennings Representative Mark S. Kinner Representative Bunky Loucks Representative Tom Reeder Representative Sue Wilson COMM ITTEE M EM BERS NOT PRESENT Senator Bill Landen LEGISLATIVE SERVICE OFFICE STAFF Josh Anderson, Senior Staff Attorney Dean Temte, Senior Fiscal Analyst Matt Sackett, Senior Fiscal Analyst OTHER LEGISLATORS PRESENT Senator Jeff Wasserburger Representative Jerry Paxton OTHERS PRESENT AT M EETING Please refer to Appendix 1 to review the Subcommittee Sign-in Sheet for a list of other individuals who attended the meeting. The Committee Meeting Summary of Proceedings (meeting minutes) is prepared by the Legislative Service Office (LSO) and is the official record of the proceedings of a legislative committee meeting. This document does not represent a transcript of the meeting; it is a digest of the meeting and provides a record of official actions taken by the Committee. All meeting materials and handouts provided to the Committee by the Legislative Service Office, public officials, lobbyists, and the public are on file at the Legislative Service Office and are part of the official record of the meeting. An index of these materials is provided at the end of this document and these materials are on file at the Legislative Service Office. For more information or to review meeting materials, please contact the Legislative Service Office at (307) 777-7881 or by e-mail at [email protected] . The Summary of Proceedings for each legislative committee meeting can be found on the Wyoming Legislature’s website at www.wyoleg.gov. PAGE 2 OF 16 EXECUTIVE SUMMARY The Committee met for two days in Buffalo. The Committee heard testimony related to tobacco taxes, local government revenue, the streamlined sales tax, the wind tax, tax exemptions and broadening the state sales tax. The Committee voted to approve bills related to local government revenue and tax exemptions, as amended. The Committee did not move forward bills related to the wind tax or broadening the state sales tax. The Committee requested that staff draft a bill related to the streamlined sales tax initiative for consideration at the November meeting of the Committee. CALL TO ORDER (SEPTEMBER 22, 2016) Co-chairman Peterson called the meeting to order at 8:00 a.m. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 2 to review the Committee Meeting Agenda. TOBACCO TAXES Mr. Dean Temte of the Legislative Service Office provided two handouts to the Committee related to the fiscal shortfall from the tobacco settlement trust income account. Appendix 3. He noted that the sixty cent tax per pack on cigarettes will generate $19.7 million dollars in 2016, and approximately 85% of that is distributed to the general fund. However, the tobacco health programs are funded from the tobacco settlement trust income account. Previously the costs of the programs were exceeding the amounts generated from the trust account, though the income currently appears sufficient for the 2017-2018 biennium. Mr. Dan Noble of the Department of Revenue noted that the current distribution of tobacco taxes is complex, due to the evolution of the tax over time. The formula could be simplified to be more understandable without changing the distribution of the taxes. Ms. Korin Schmidt of the Department of Health provided a handout to the Committee on the status of tobacco settlement funds reductions following the recommendations of the Joint Labor Committee. Appendix 4. She noted that the reductions proposed by the Department were different than those that were approved by the Legislature. Mr. Jason Mincer of the American Cancer Society provided a handout to the Committee on tobacco use in Wyoming. Appendix 5. He said that tobacco use costs the state Medicaid system $44.8 million per year. Increasing the price motivates adults to quit and keeps kids from starting. He recommended increasing the cigarette tax to $1.85 per pack with an equal increase to other tobacco products. The $1.25 increase would provide for an increase of $24.16 million in taxes while providing health benefits for those that would quit or not start due to the increased cost. Mr. Tom Lacock of the Wyoming Medical Society said that the organization supports an increase to tobacco tax for the health benefits it would provide. Ms. Wendy Ongaro of the Sheridan Health Center spoke in favor of increasing the tax as part of an aggressive smoking cessation program. She noted that for employers the cost is higher to hire smokers. Mr. Tom Jones recommended that the Committee not raise the tax until the amount of funding needed is clear. Dr. Grace Gosar, physician, said that while Wyoming's tax is sixty cents per back the national average is $1.65 and if you limit the comparison to states were tobacco is not grown the average is $1.85. Only five JOINT REVENUE COMMITTEE Summary of Proceedings WYOMING LEGISLATIVE SERVICE OFFICE • 213 State Capitol • Cheyenne, Wyoming 82002 TELEPHONE (307) 777-7881 • FAX 307-777-5466 • E-MAIL [email protected] • WEB SITE www.wyoleg.gov PAGE 3 OF 16 Western states have a tax that is under one dollar per pack. She said due to the health care costs created by the product, tobacco producers have privatized their profits but socialized the costs. She recommended increasing the taxes to pay for some of those health costs. Mr. Mark Larsen of the Petroleum Marketers Association said that if taxes on cigarettes are raised $1 or $1.25 customers will travel to bordering states and there will be smuggling and theft. He also said that there is an issue with collection of the tax on the Wind River Indian Reservation and that should be addressed along with any potential increase. He recommended that the Committee not increase the tax. In response to a question Mr. Noble noted that the Department has agreements with retailers on the Reservation and they estimate the amount of cigarettes sold to non-tribal members and pay that allocated portion of the tax. Mr. Buck McVeigh of the Wyoming Taxpayers Association said that his organization would recommend against increasing the tax. He noted that currently the majority of the tax is paid to the general fund so all taxpayers benefit from a tax payed by a small segment of the population. Mr. Dave Picard of Altria and Philip Morris provided two handouts to the Committee. Appendix 6. He said that he would oppose the drafting of any bill. An increase to the tax would burden low income households. He also said there is concern about the availability of unstamped products on the Reservation. Mr. Mike Moser of the Wyoming State Liquor Association said that he would oppose an increase to the tax. The price would increase by $12.50 per carton which would lead to customers going out of state to make a purchase. He said that an increase to the tax would cause damage to retailers in the state. Ms. Laura Lewis of the Cigar Association of America said that cigars are purchased by the box and an increase in the tax would drive purchases away from local retailers and to out of state sources. Mr. Noble noted that if there is an increase in the tax it would be important to address how to tax the inventory that was bought at the old price. The last time the tax was increased there was a lot of pre- purchase and it was approximately a year until there were stamps at the increase price. He also noted that there is currently a 6% discount to wholesalers for stamping product and that amount may need to be revised if the tax is increased by a significant amount. After additional discussion, Co-Chairman Madden moved that the tax be increased to ninety cents which would keep the tax on pace with inflation since the last increase to the tax. The motion was seconded. The motion failed by voice vote. LOCAL GOVERNMENT REVENUE Mr. Josh Anderson of the LSO explained 17LSO-0105 – Local optional sales and use tax. Appendix 7. He noted that this bill arose out of discussions at the previous meeting of the Committee when local governments indicated that they were hesitant to implement a ballot proposition to implement the maximum authorized amount of the optional taxes because they were unclear as to whether previously implemented taxes would be at risk. The bill makes clear that local option taxes can be imposed through separate measures up to the maximum amount and that those separate propositions would not have any effect on previously adopted propositions. JOINT REVENUE COMMITTEE Summary of Proceedings WYOMING LEGISLATIVE SERVICE OFFICE • 213 State Capitol • Cheyenne, Wyoming 82002 TELEPHONE (307) 777-7881 • FAX 307-777-5466 • E-MAIL [email protected] • WEB SITE www.wyoleg.gov PAGE 4 OF 16 Mr. Noble noted that an increase had been tried previously but the proposition was written in such a way that it applied to both the existing tax and the newly proposed tax. The bill makes clear that the propositions can be voted on separately. Mr. Pete Obermueller of the Wyoming County Commissioners Association said that his organization supports the bill. Ms. Shelly Simonton of the Wyoming Association of Municipalities said that her organization supports the bill. Co-Chairman Madden moved that the Committee sponsor the bill and the motion was seconded.
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