Director's Report

January 24, 2007

From severance taxes to quality child care

Plenty of talk Wednesday over incentives to help kids … and power companies

Legislators on the House Minerals Committee Wednesday wrestled with a severance tax cut intended to provide an incentive for someone, anyone, who will build the first IGCC electricity generating plant in Wyoming.

Meanwhile, the House Labor, Health and Social Services Committee worked well into Wednesday evening going through the Quality Child Care bill, HB 95, section-by-section as Chairman Jack Landon worked diligently to anticipate questions about the proposal that will arise on the floor.

In House Minerals, HB 143 was amended and tabled when the committee ran out of time to work it. Chairman Tom Lockhart, R-Casper, HD 57, ended the discussion just before 10 a.m. and said consideration of the bill will resume Friday.

The measure would cut the severance tax on coal burned at an Integrated Gas Combined Cycle (IGCC) electrical generating planst constructed in Wyoming from 7 percent to 1.5 percent during the years 2008 to 2030. Proponents say it will help attract capital to build the plants, which are expected to cost about $2 billion each.

The Equality State Policy Center opposes the incentive. Testimony over the interim indicated that the price of coal – let alone Wyoming’s small severance tax on coal – is not a driving factor in the decision to build one of the plants. The capital costs are the driver, Steve Waddington of the Wyoming Infrastructure Authority reported last month.

Further, the ESPC believes that it will be next to impossible to be certain that a tax cut that benefits the company that mines the coal can truly be proven to flow through to the constructors of the plant. Rep. Lockhart proposed a long amendment to the bill intended to accomplish that goal.

Nevertheless, since companies building IGCC plants must get a state certificate that proves they qualify for the break, all the coal producers will be aware of them. They may simply consider the tax another factor in negotiations over coal price. It will be extremely difficult to prevent the tax break from simply getting lost in those negotiations.

The IGCC plant technology is innovative and will help ensure future coal markets for Wyoming coal. But engineers must first prove that the plants can be operated profitably at altitude in Wyoming. The technology has not been proven to work above 4,000 feet in elevation.

Rep. Deborah Hammons, D-Worland, HD 27, noted that if the technology is proven and a number of plants are built, Wyoming will lose significant revenues on coal production. The committee rejected her motion to limit the tax break to IGCC plants built before 2017.

Quality Child Care -- Work on the Quality Child Care got off to a quick start when the committee agreed to excise from the bill a section that would have given the Wyoming Business Council $3 million to help finance construction of new centers.

Proponents of the bill say that aspect of the legislation is not crucial to the greater goals of expanding child care capacity in the state and improving quality by gradually professionalizing the sector.

Rep. Elaine Harvey, R-Lovell, HD 26, urged the committee to maintain the high quality standards outlined in the proposed bill, HB 95, then be sure to give people working in the industry the time, money and opportunity to meet the high standard.

Chairman Landon told the committee that it will be important for the committee to take the measure to the floor with “some unity” or the measure will fail. He said he wants at least seven of the nine committee members agreeing with each aspect. If the committee takes them to the floor of the House with a series of 5-4 votes, he predicted it will fail.

If we don’t (achieve unity), and the long knives come out on the floor, we’re doomed,” he said.

Rep. Harvey argued in an earlier hearing this week that the need for the quality child care system is clear. She noted that 66% of Wyoming children between birth and 8 years of age are in child care. Not all of them are in licensed facilities, not all of them are in quality child care facilities, “but they’re all there,” she said. Every child care facility surveyed by the state reported that it has a waiting list of people seeking space to place their children, she added.

Please contact both your local legislators and the members of the House Labor and Appropriations Committees. If a member of either committee is your representative, please be sure to note in your message to that legislator that you live in his or her district. Quality Child Care is House Bill 95 and the bill containing the appropriation Quality Child Care is House Bill 96. Both can be read on the Legislature’s Web site.

The House Labor, Health and Social Services Committee includes: Jack Landon, chair; Ken Esquibel, Liz Gentile, Timothy Hallinan, Elaine Harvey, Jerry Iekel, Tom Lubnau, Lori Millin, and Jeb Steward.

Dan Neal
Executive Director