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

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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.

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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. The motion passed with a roll call vote of thirteen ayes and one excused. See vote form attached to Appendix 7.

STREAMLINED SALES TAX Mr. Dan Noble explained the efforts of Wyoming related to the streamlined sales tax agreement. He noted that Senator Enzi had made an effort to get streamlined sales tax legislation passed but after sixteen years there has been no action by Congress. Some states are now trying to force the issue. South Dakota passed a bill specifying that sales of $100,000 or more or two hundred separate transactions from an online retailer provides the nexus with the state that is necessary to justify requiring the retailer to collect sales tax. The bill also provides injunctive relief and a refund mechanism if the statute is found to be unconstitutional.

Mr. Noble provided a handout of the South Dakota bill. Appendix 8. He noted that the bill is relatively simple. The retailers have the technology to collect the tax and it would put remote sellers on equal footing with brick and mortar sellers.

Mr. Mark Grabin said that he owns a business that sells through Amazon. He said Amazon is like a consignment store. There are thirteen states that he has to collect taxes for. He said that it is possible for his business to have a nexus in states that he is not aware of. It is a cumbersome task to collect taxes in different jurisdictions but he uses a service to help navigate the taxes.

After additional discussion Representative Kinner moved to have staff draft a bill based on the South Dakota bill, excluding the legislative findings portion. The motion was seconded and passed by voice vote.

REVENUE OPPORTUNITIES FOR SCHOOL FACILITIES FUNDING Representative Kinner said that the Education and Select School Facilities Committees have not taken a position on revising the number of students per classroom and it is not a matter that has been voted on during this interim.

Mr. Del McOmie of the School Facilities Department said that there is $1.2 billion in active school facilities construction with approximately $200 million left to pay out.

Tax on Wind Energy Production Mr. Shawn Reese of the Wyoming Business Council said that Wyoming is an energy state and with each energy type there are challenges and opportunities. He noted that other states are competitors with Wyoming and it is important to determine how Wyoming wants to position itself. He noted that with

JOINT REVENUE COMMITTEE Summary of Proceedings

wind there are short term opportunities including construction jobs and a spike in sales tax collections and long term opportunities including additional manufacturing, services, infrastructure and collateral benefits.

Dr. Robert Godby of the University of Wyoming provided a handout to the Committee of a study on the wind tax in Wyoming. Appendix 9. He explained the findings of the study to the Committee. He noted that he was asked to look at what is the competitiveness of Wyoming wind and what are the benefits and risks in a change in the tax level. He noted that competitively, while Wyoming has good wind it is ranked eleventh in the country and third in the West behind Montana and New Mexico. There has been no growth in Wyoming since the implementation of the wind tax though this could be due to transmission capacity, incentives and technological advances. He noted that the technological advances such as taller towers and bigger rotors benefit those states with a lower quality wind resource and do not benefit Wyoming because the wind is generally too strong for taller towers. The study concludes that Wyoming is sensitive to competition with other states for wind development.

Dr. Godby noted that wind does not generally compete with coal because the majority of the coal produced in the state goes to the Eastern United States or to Texas. Only approximately 7% of coal produced in the state is used for power in the western grid. He said that while it is unclear what the tax sensitivity of the wind industry is, there are competitiveness factors. He noted that while an increase to the tax would provide a benefit in terms of additional revenue, if the state were to lose out on the potential wind projects, there would be a large cost to the state.

Mr. Matt Sackett of the LSO provided a handout to the Committee on taxation of wind, coal and natural gas. Appendix 10. He noted that the comparison includes taxes on wind generation, severance taxes, ad valorem tax on production, federal mineral royalties and coal lease bonuses. It does not include sales tax or other property taxes paid for wind, coal or natural gas. He noted that while the calculation for wind was simply limited to the $1 per megawatt hour tax, the calculation was more complicated for coal and natural gas and the numbers in the handout were an effort to compare the tax on the commodity.

Mr. Dan Noble provided a handout of tax projections for the Power Company of Wyoming's proposed projects in Carbon County. Appendix 11. He said that the calculations prepared by the Power Company of Wyoming appear to be accurate and the Department was not offering an opinion on the comparisons.

Mr. Chad Teply and Mr. Jeff Larsen of Rocky Mountain Power provided a handout to the Committee on how they assess their taxes. Appendix 12. Mr. Teply walked the Committee through the handout and noted that they spend $3.23 in taxes for wind per megawatt hour and $2.72 for coal per megawatt hour. Mr. Larsen noted that if the state tax burden is fair, it is allocated out to all of the customers, but there are situations were costs can be assigned directly back to one state. For example, the renewable portfolio standards are a specific cost to Oregon and only customers in that state pay for those increased costs.

Ms. Roxanne Perruso of the Power Company of Wyoming and Mr. Paul Hickey of Hickey and Evans addressed the Committee on the potential impact of an increase in the wind tax. Ms. Perruso noted that the company has spent $120 million over the last nine years developing Wyoming wind energy projects. After nine years of permitting they became aware of the proposal to increase the wind tax and were concerned about the timing related to their project. When they first started the project in 2008 the only applicable tax was the property tax. Since that time the State has repealed the sales tax exemption and then added the generation tax. The tax burden has increased $400 million from their initial estimate. She said that it was important to have some level of certainty in the tax on these projects. Ms. Perruso questioned whether it was appropriate to compare mineral resources with non-mineral resources and

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noted that there is not an additional tax on other types of electricity. She recommended not increasing the tax on wind any further. Ms. Perruso said that they would support efforts currently in Congress for the State and the counties to obtain a share of federal fees and royalties paid for wind projects on federal land.

Mr. Paul Hickey said that wind is an industry in its infancy while coal and natural gas are mature industries. He said it was important to consider the competition for these projects related to markets in other parts of the West. It is a critical juncture in the development of wind and it is not the time to increase the tax on projects that have the potential to bring long term benefits to the state.

Mr. Bob Jensen of Holland and Hart provided a handout to the Committee on behalf of TransAlta. Appendix 13. He noted that TransAlta has a 144 megawatt wind energy facility in Uinta County. Mr. Cameron Stonestreet of TransAlta noted that two recent tax increases and consideration of a third hurts Wyoming's competition with other states including Kansas and Colorado. He said that wind generation also supports further development of the natural gas market in the state.

Mr. Juan Carlos Carpio-Delfino of Viridis provided a handout to the Committee on their wind energy development plan in Carbon County. Appendix 14. He noted that they have been working on the project for six years. The total project investment will be $3.2 billion with a final capacity of 1,870 megawatts. The project is scheduled over nine phases. The first phases are on State land which will bring significant revenue to the State. He noted that power purchase agreements were seventy dollars per megawatt hour in 2009 but have gone down to twenty to thirty dollars per megawatt hour today. Mr. Carpio-Delfino suggested promoting confidence by creating a stable business environment.

Mr. Peter Polowski of S Power said that they have an eighty megawatt wind project in Glenrock and expect to complete construction this year. He said that they have made $36 million in payments to the state and other landowners and overall have a $100 million investment in the state. He said his company is looking to expand but the level of uncertainty with Wyoming taxes puts the State at a disadvantage. He noted that Wyoming has the toughest State permitting process through the Industrial Siting Division.

Mr. Paul Martin of Inter Mountain Wind said his company has a project with 170 turbines all on public land in Wyoming. He said the first years of the power purchase agreement start between fifteen and twenty dollars increasing to twenty-five mid-way through the agreement. If the tax were to increase to four dollars, the project would be unworkable. He recommended that the Committee not increase an already unique tax. He stated that having wind projects will help offset the shortfall in other ways if those projects are not crippled by taxes. Wind and fossil fuels are very different and should be taxed different.

Mr. Sam Massie of Next Era said that Wyoming is competing with other states and urged the Committee not to increase the tax.

Representative Paxton said that Carbon County lost the coal industry a long time ago along with half of their assessed valuation. The wind industry is important to Carbon County as a way to replace some of that lost revenue and they are not willing to take the risk of losing projects through increasing the tax.

Co-Chairman Madden read a letter from Representative Burkhart opposing any increase in the wind tax. Appendix 15.

Ms. Simonton of the Wyoming Association of Municipalities said that the entire membership approved sending a letter to the Committee urging no increase in the tax on wind.

JOINT REVENUE COMMITTEE Summary of Proceedings

Ms. Karen Heath of Medicine Bow provided the Committee with a resolution opposing new wind taxes. Appendix 16. She noted that for small towns wind development may be the only opportunity they have for any industry.

Mr. Scott Hannon of Rawlins said that wind development can have long term benefits for cities and provide additional business opportunities. He urged the Committee not to increase taxes on wind.

Mr. Obermueller of the Wyoming County Commissioners Association said that they support the efforts at the Federal level to introduce revenue sharing with the state and counties but they oppose any increase in the wind tax.

Commissioner Lindy Glode of Carbon County said the county has been working on the wind project for eight years and has a lot invested in its completion. She said that she would urge the Committee not to increase the tax on wind.

Ms. Amy Buttle of the Carbon County Council of Governments said that it was important to listen to the opinions of local governments and urged the Committee to oppose any increase in the wind tax.

Mr. Noel Reed of the Wyoming Economic Development Association said that there is a need to work towards economic diversification and the organization would oppose an increase to the tax.

Ms. Cindy Wallace of the Carbon County Economic Development Corporation said increasing the tax sends a message that development in Wyoming is risky and it is important not to create barriers to business. She said that wind projects will help recruit other businesses and will increase revenue to the State if the wind tax is left alone.

Mr. David Throgmorton of the Carbon County Higher Education Center said wind projects represent a new career opportunity. He said that while there are not nearly as many jobs as mineral development the jobs in the wind industry are good jobs.

Mr. Buck McVeigh of the Wyoming Taxpayers Association provided a handout to the Committee on wind tax. Appendix 17. He said that his organization would be opposed to an increase in the wind tax.

Mr. Jim Magagna of the Wyoming Stockgrowers Association said that agriculture is a cyclical industry and wind development can give some ranches an opportunity to diversify. He said that an increase to the tax would devalue the land interest of his members and they would oppose an increase to the tax.

Mr. Jeff McDonald said that currently twenty-seven people working on the Chokecherry project and most of the employees are from Natrona County. He said he would oppose increasing the tax in order to keep jobs coming to Wyoming.

Ms. Bonnie Cannon of the Wyoming Contractors Association said that her organization would oppose increasing the tax because of the need for good jobs and the need to diversify the economy.

Mr. Terry Wickham said it was important to have a stable and fair business environment for wind farms. He said that the $1 per megawatt hour tax is fair and there should not be any further change to the tax.

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Mr. Richard Grant, rancher, said that increasing the tax might mean a small increase in state revenues, but could cost the State projects which would have provided larger benefits to the State. He opposed an increase to the tax.

Mr. Rob Boner, rancher, said that he would urge the Committee to oppose any increase to the tax.

Senator Case moved that the Committee vote to sponsor 17LSO-0042 – Wind energy production tax, and the motion was seconded. Appendix 18.

Co-Chairman Madden moved that the amount of the tax be amended to three dollars which would still be competitive with other states due to Wyoming's low industrial property tax.

After additional discussion, the motion to change the amount to three dollars failed by voice vote.

The committee voted to change the amount to $1.25 by voice vote.

The bill as amended failed by roll call vote with four ayes, nine noes and one excused. See vote form attached to bill.

The Committee took no action on 17LSO-0043 – Supplemental tax on production of energy from wind.

MEETING RECESS The Committee recessed at 7:15 p.m.

CALL TO ORDER (SEPTEMBER 23, 2016) Co-chairman Madden called the meeting to order at 8:30 a.m.

State Treasurer State Treasurer Mark Gordon addressed the Committee on a cleanup to the bill passed by the Committee in the 2015 interim. The bill authorized additional investment opportunities for local governments but as currently in statute the prudent investor rule applies only to the State Treasurer. It would be advisable to make it applicable to all investors of public funds in statute.

Ms. Betsy Anderson of the State Treasurer's Office suggested that an amendment be made that mirrors the existing language in W.S. 9-4-715(d) and extend that to local governments and their boards.

Senator Case moved that staff draft a bill implementing the recommendations of the State Treasurer and the motion was seconded.

Ms. Anderson noted that it would also be recommended to include a requirement that anyone contracted with to provide investment services is subject to Wyoming jurisdiction and is considered a fiduciary by law. She noted that there are comparable provisions for other entities.

Senator Case amended his motion to include all recommendations by the Treasurer's Office. After additional discussion the motion passed by voice vote.

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SALES TAX EXEMPTIONS 17LSO-0044 – Tax exemption repeals. Co-Chairman Madden noted that 17LSO-0044 was drafted as a vehicle to consider various tax exemptions. Appendix 19.

The draft bill was moved by Senator Driskill and the motion was seconded.

Senator Driskill moved to remove subparagraph (Q), the exemption for railroad rolling stock and any related provisions from the bill and the motion was seconded.

Mr. Dan Noble of the Department of Revenue provided a handout to the Committee on specified tax exemptions in Wyoming. Appendix 20. He noted that the rolling stock exemption is one of the exemptions his office is required to report on. Recently there has been an effort to revise the reports on exemptions and make them more informative than the current reports. The new reports are not yet complete but the goal is to provide data that will be helpful in making decisions as to whether to retain the exemptions.

Mr. Shawn Reese of the Wyoming Business Council provided a handout to the Committee on the exemptions of manufacturing, data centers and rolling stock. Appendix 21. He said that part of the economic diversification strategy is the expansion of advance industries which are those industries that are science, technology, engineering and math intensive and pay more in wages. Railroad rolling stock repair should be on the list of those industries.

Mr. Kevin Ogle of Progress Rail Service provided a handout to the Committee on railroad rolling stock repairs. Appendix 22. He noted that their car repair facility employs fifty people and while there has been a decline in their business, along with the decline in coal, the company has made an effort to keep those jobs in Wyoming. He said that these types of exemptions are common in other states. In response to a question, he noted that when the exemption was repealed in 2004 there was a loss of business and the facility went from fifty employees to twelve due to the additional expense caused by the tax.

Mr. Dean Hicks of Union Tank said that they are encouraging customers to send cars to Wyoming but they are not in a good location. They currently have 130 employees but if the exemption is removed there would likely be a change in their business strategy.

Mr. Dan Noble noted that it is important to determine what the goal of the exemption is and different exemptions may have different purposes.

Mr. Chris Brown of the Wyoming Economic Development Association recommended that the Committee vote to keep the exemption and remove it from the bill because it is doing what it was intended to do by providing good paying jobs in the state. He said that increasing the tax at a time when mineral industry is down would be bad for these types of businesses.

Mr. Jonathan Downing of the Wyoming Mining Association urged the Committee to continue the exemption.

After additional discussion, the motion to retain the railroad rolling stock repair exemption by removing it from the bill passed by voice vote.

JOINT REVENUE COMMITTEE Summary of Proceedings

Senator Kinskey moved to retain subparagraph (O) related to the manufacturing exemption by removing it from the repeal section of the bill and to further amend the exemption by extending the sunset date from 2017 to 2023. Appendix 23. After discussion, the portion of the motion to extend the sunset date failed by voice vote. The remainder of the motion was seconded for discussion.

Mr. Noble noted that an updated report on the manufacturing exemption with additional data will be available in November.

Mr. Reese said that while finding sources of revenue for the state is an important consideration it is also important to look at how to diversify the state's economy. Wyoming is the least diversified state in the nation. The majority of the state revenue comes from minerals and much of the non-mineral production is tied to minerals sector. The manufacturing machinery exemption is used for business expansion and recruitment. He said that likely all states that have a sales tax have this exemption and it is important to retain the exemption to grow the manufacturing sector in Wyoming.

Mr. Bob Jensen provided a handout to the Committee from the Alliance of Wyoming Manufacturers. Appendix 24. He said that it was important to keep the exemption in order to be competitive with other states. Businesses consider a number of factors but the sales tax exemption is a piece of the decision process.

Mr. Rob Whipple of Holly Frontier said the exemption is part of the consideration of where the company will spend capital in the future. He noted that they are competing with other refineries in other states and while other taxes are considered the existence of the exemption does factor into the decisions of the company.

Mr. Jim Neiman of Neiman Enterprises said that South Dakota does not have this exemption but there are no property taxes on personal property which puts South Dakota ahead of Wyoming. Retaining the exemption does have an effect when his business is ready to expand due to the high tech equipment involved in the sawmill industry.

Mr. Dustin Kukuchka of L and H Industrial said that his company is involved in mining and heavy industrial manufacturing and urged the Committee to keep the exemption in place.

Mr. Don Parrott of Vacutech said that his company makes industrial vacuum systems and that the exemption was part of the financial decision to move to Wyoming. He urged the Committee to keep the exemption in place.

Mr. Rex Lewis of Puma Steel said that the exemption helps with the ability to control costs through constant equipment upgrades. He said that it puts manufacturers in Wyoming on a level playing field in the world economy. Roughly forty states have this exemption, and New York has suspended all manufacturing taxes for 10 years.

Mr. Chris Brown said that the Wyoming Economic Development Association recommends keeping the exemption in place.

After additional discussion, the motion to retain the manufacturing machinery tax exemption and remove it from the bill passed by voice vote.

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Representative Kinner moved to remove subparagraph (S), the exemption for data processing centers and any related provisions from the bill and the motion was seconded.

Mr. Shawn Reese said that it is important to determine what the purposes of these exemptions are. The purpose of this exemption is to grow a technology workforce and attract technology companies to Wyoming. He said that growth in this sector has been remarkable and the technology workforce will continue to grow which will attract other technology companies. Wyoming was initially able to sell itself by its low average temperatures and energy costs but that is no longer enough. Other states are offering incentives to attract these companies.

Mr. Shawn Mills of Greenhouse Data said that they are starting to see a lot of technology jobs move to Wyoming and that is a sector that could continue to grow. The tax exemption makes it possible to compete with data centers in other states.

Mr. Dave Picard of Echostar said that there are other areas that are attractive for data centers and the existence of the tax exemption has a meaningful impact on decisions of the company.

Mr. Buck Holmes of Laramie County provided a handout to the Committee on the economic impacts of data centers in Laramie County. Appendix 25. He said that data centers are sensitive to taxes and provide a lot of benefit to Laramie County.

Mr. Joe Milcheski of Black Hills Energy said that rates for residential customers have not changed due to the infrastructure necessary to serve the Microsoft data center. In response to a question Mr. Milcheski noted that the demand load of Microsoft is very consistent and allows Black Hills to run its coal fired electrical generation plant at 97% capacity.

Mr. Chris Brown said that the Wyoming Economic Development Association recommends continuing the data center tax exemption to provide for job growth.

After additional discussion, the motion to retain the tax exemption for data center purchases and remove it from the bill passed by voice vote.

Representative Kinner moved to remove subparagraph (J), the exemption for aircraft repair and any related provisions from the bill and the motion was seconded.

Mr. Jay Lundell of the Gillette – Campbell County Airport provided a handout to the Committee of letters urging the Committee to keep the exemption for aircraft repair in place. Appendix 26. He noted that it is a small part of the revenue picture for the state but it is extremely important to their businesses.

Mr. John Stopka of Sheridan County Airport said that this exemption helps out the airports and allows them to attract business from out of state.

In response to a question, Mr. Lundell noted that most of the airports in the state are struggling and this exemption helps them to be as self-sufficient as possible.

Mr. Leroy Done of Natrona Avionics said that this exemption affects a very small number of people in the state but it allows them to compete with similar businesses in other states.

JOINT REVENUE COMMITTEE Summary of Proceedings

After additional discussion, the motion to retain the tax exemption for aircraft repairs and remove it from the bill passed by voice vote.

Representative Edwards moved to remove subparagraph (R), the exemption for coal gasification and any related provisions from the bill and the motion was seconded. He noted that currently there are no companies able to use this exemption and it would be beneficial to leave the option open as a possibility to help out the coal industry.

Mr. Jonatan Downing said that the Wyoming Mining Association supports retaining the current exemption.

After additional discussion, the motion to retain tax exemption for coal gasification and remove it from the bill failed by voice vote.

Senator Driskill moved to remove subparagraph (H), the exemption for farm equipment and any related provisions from the bill and the motion was seconded.

Mr. Noble noted that prior to the implementation of this exemption farm equipment was assessed a reduced tax. If the exemption is repealed, farm equipment would be subject to a higher rate of tax than was assessed previously.

Mr. Tom Jones, on behalf of the Farm Implement Dealers of Wyoming, said that this exemption allows dealers in Wyoming to compete with dealers in other states. The agricultural areas of the state are generally near the borders where it may be easy to go across the border and purchase equipment without a tax.

Mr. Brett Moline of the Wyoming Farm Bureau said that they support retaining the current exemption. He said that the exemption does help level the playing field with agricultural producers and implement dealers in other states.

Mr. Jim Magagna of the Wyoming Stockgrowers Association said that repealing the exemption could have a negative impact on the businesses that sell that equipment. He said that for an agricultural producer this exemption is similar to the exemption for manufacturing equipment as discussed earlier in the meeting and that he is in favor of retaining the exemption.

Mr. Richard Garrett of the Nature Conservancy said that the working lands in the state are critical for the state's wildlife and recommended retaining the exemption.

After additional discussion, the motion to retain tax exemption for farm equipment and remove it from the bill passed by voice vote.

Mr. Buck McVeigh of the Wyoming Taxpayers Association provided a handout to the Committee on tax exemption criteria. Appendix 27. He said that the Association would oppose this bill because the timing creates uncertainty in the business climate of the state.

Mr. Jonathan Downing of the Wyoming Mining Association said that the Association is opposed to the bill.

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Ms. Wendy Lowe on behalf of Peabody Coal said that they would oppose the bill because the exemption for coal gasification would be repealed if the bill were to pass.

Senator Driskill moved to reconsider the coal gasification exemption and the motion was seconded. The motion failed by voice vote.

The bill as amended passed with a roll call vote of 9 ayes, 4 noes and 1 excused. See vote form attached to bill.

17LSO-106 – Sales tax extension. Mr. Dan Noble noted that some services are currently taxed in Wyoming. The bill arose from a discussion at the last meeting regarding the amount of revenue that could be raised if there were taxes on other services. Mr. Noble provided a handout of revenues which could be raised from broadening the sales tax. Appendix 28. He noted that the numbers used in the handout were based on the amounts generated in South Dakota because it is similar to Wyoming. The amounts were adjusted for the population difference between the two states.

Mr. Noble noted that the bill could be revised to enumerate the specific services that would be taxed or additional exemptions from the tax, but that the bill as drafted could be used to start the discussion.

Ms. Laurie Urbigkit of the Wyoming Association of Realtors said that this would add to the total cost of real estate transactions and that her association would oppose the bill.

Mr. Buck McVeigh of the Wyoming Taxpayers Association said that his association was opposed to the bill due to the blanket nature of the bill. He said if the taxes were imposed using a more surgical approach his association could be in favor of it.

Mr. Charlie Powers, ranch broker, said this bill would have an impact on the cost of living and the viability of small businesses. He suggested implementing taxes that would capture revenue from those that live outside the state, such as the wind tax.

Mr. Dustin Kukuchka of L and H industrial said that if engineering services are provided online and received in Wyoming it could cause concern over whether the tax is due. He said that administration of the tax would be difficult.

Mr. Jonathan Downing of the Wyoming Mining Association said that this could increase the cost of doing business by five to six percent and the industry is very concerned about increases to their costs at this time.

Ms. Marcia Shanor of the Trial Lawyers Association said only three states have taxes on legal services. She said Florida tried to implement a tax on legal services but found it too difficult to administer and repealed it. She noted that lawyers compete nationwide and that this could put Wyoming lawyers at a disadvantage.

Ms. Jody Levin said that as a contract lobbyist this would impact her directly by providing a cost that she may not be able to pass on to her client. She also stated that if this bill was implemented on her cable client their customers could see a $52 increase to their cable bill. She said that the bill would effectively be an income tax for anyone that performs a service. She suggested that the Committee consider a broad income tax, rather than a tax on services.

JOINT REVENUE COMMITTEE Summary of Proceedings

Mr. Dave Picard said that services provided by a satellite broadcast network should be included in the exemptions provided in the bill, as well as services provided by credit unions. He said that as a lobbyist the bill would act as a gross receipts tax or an income tax that he could not pass on to his clients.

Ms. Erin Taylor said that there are questions of how the tax would apply to online services and that the tax would be difficult to enforce and source.

Mr. Tom Jones said that the bill would be an income tax on anyone who provides contract services and would take six percent of their income without any deductions.

After additional discussion the Committee took no action on the bill. 17LSO-0106 – Sales tax extension. Appendix 29.

PUBLIC COMMENT Ms. Amber Hernando of the Wyoming Outdoor Council said that flaring of natural gas represents a loss of a non-renewable resource which is a loss of revenue to the state and has an effect on air quality.

After discussion Co-Chairman Madden noted that the issue of flaring could be added to the agenda for the November meeting of the Committee.

MEETING ADJOURNMENT There being no further business, Co-chairman Madden adjourned the meeting at 3:00 p.m.

Respectfully submitted,

Representative Madden, Co-chairman

JOINT REVENUE COMMITTEE Summary of Proceedings

Committee Meeting

Materials Index

Appendix Agenda Item Appendix Description Appendix Provider

1 Committee Sign-In Sheet Lists meeting attendees Legislative Service Office

2 Committee Meeting Provides an outline of the topics the Legislative Service Office Agenda Committee planned to address at meeting

3 Tobacco Taxes Tobacco taxes and trust fund expenditures Legislative Service Office

4 Tobacco Taxes Settlement funds update Department of Health

5 Tobacco Taxes The toll of tobacco in Wyoming Jason Mincer

6 Tobacco Taxes Tobacco tax information Altria

7 Local Government 17LSO-0105 – Local optional sales and use Legislative Service Office Revenue tax.

8 Streamlined Sales Tax South Dakota bill on internet sales tax Department of Revenue collections

9 Wind Tax Wind Industry Competitiveness and Tax University of Wyoming Sensitivity

10 Wind Tax Taxation of Wind, Coal and Natural Gas Legislative Service Office

11 Wind Tax Tax projections Department of Revenue

12 Wind Tax Wind tax information Rocky Mountain Power

13 Wind Tax Wyoming and TransAlta TransAlta

14 Wind Tax Viridis Eolia Wind Energy Development Viridis Eolia Plan

15 Wind Tax Letter to the Committee Representative Burkhart

16 Wind Tax Resolution from Town of Medicine Bow Medicine Bow

17 Wind Tax Cornerstones of Taxation Wyoming Taxpayers Association

18 Wind Tax 17LSO-0042 – Wind Energy Production Legislative Service Office Tax

JOINT REVENUE COMMITTEE Summary of Proceedings

19 Tax Exemptions 17LSO-0044 – Tax exemption repeals Legislative Service Office

20 Tax Exemptions Tax Exemptions in Wyoming Department of Revenue

21 Tax Exemptions Manufacturing, data centers and rolling Wyoming Business stock Council

22 Tax Exemptions Railroad rolling stock Progress Rail

23 Tax Exemptions Amendment for manufacturing machinery Senator Kinskey

24 Tax Exemptions Wyoming Manufacturing Alliance of Wyoming Manufacturers

25 Tax Exemptions Laramie County Economic Impacts Laramie County

26 Tax Exemptions Letters from Wyoming Airports Wyoming Airports

27 Tax Exemptions Exemption Criteria Wyoming Taxpayers Association

28 Broadening State Sales Tax Enhancing Revenues Department of Revenue

29 Broadening State Sales Tax 17LSO-0106 – Sales tax extension Legislative Service Office

JOINT REVENUE COMMITTEE Summary of Proceedings

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