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2005 General Session
Last year, the Legislature provided an additional $57.5 million to cities, towns and counties, to be distributed in 2005 and 2006. This two-year distribution was in addition to the state mineral severance tax that automatically goes to those local governments. The Legislature also directed the Joint Revenue Interim Committee and the Joint Appropriations Interim Committee to review and evaluate distribution formulas for federal mineral royalties, state severance taxes, and revenue flows from these sources to local governments.
Every year, the first $155 million received by the state in mineral severance taxes is automatically distributed to a variety of accounts, including local governments. Severance taxes above $155 million are currently divided between the general fund and the budget reserve account.
The Joint Revenue Interim Committee proposed HB 5 to modify the distribution of severance taxes above the $155 million cap to include additional funding for towns, cities and counties. Under this proposal, 27% of severance taxes received by the state each year would have been directed to local governments, 23% would have gone into the general fund, and 50% would have gone into the budget reserve account.
Proponents noted that, since the Legislature established caps on the amount of severance taxes that local governments receive, many towns and counties in Wyoming have had difficulty paying for basic local government needs. They noted that legislative action last year provided two years of relief for local governments in the form of extra money, but that the fundamental problem won't be resolved until more funds are directed toward local governments on a permanent basis.
Opponents argued that other spending proposals in this legislative session will benefit local governments for the coming year, and they wanted to wait until the 2006 budget session to consider permanent changes to increase funding to local governments.
HB 5 unanimously passed two House committees (Revenue and Appropriations) and the full House, but was defeated in the Senate Revenue Committee on a 3-2 vote. Unfortunately, the committee vote was not recorded, because legislative rules only require the recording of committee votes that pass bills, but not votes that defeat bills. So there is no public record of which committee members voted for or against HB 5.