Local government distribution bill heads to Senate with requested 8 percent rate

(Cheyenne, WY) – A bill draft proposing several changes to the state’s direct distribution formula for local governments passed through the Wyoming House last week and is now scheduled for consideration by the Senate.

The version of House Bill 107 that came out of the Senate Appropriations Committee on Friday sets the biennial appropriation – which is currently determined by the legislature – at 8 percent of the prior fiscal year’s statewide sales and use tax revenues.

That 8 percent figure aligns with the original request from the Wyoming Association of Municipalities and the Wyoming County Commissioners Association and avoids a decrease in the direct distribution for the coming biennium.

But it wasn’t the number that appeared in the original bill draft, which set the rate at 5.6 percent.

The Wyoming House of Representatives voted to increase the rate to 7 percent on Feb. 12, and the Senate Appropriations Committee raised it to 8 percent last week.

House debate

The House did consider raising the rate to 8 percent when HB 107 came up on second reading this month, but the amendment from Wyoming Rep. J.R. Larson, R-Rock Springs, failed to pass.

The proposal generated a debate, however, including comments from Wyoming Rep. Lloyd Larsen, R-Lander, who initially opposed the 8 percent figure but later seemed to reverse his opinion. 

During his initial comments, Larsen talked about the “historic background” of the direct distribution, which was originally created when the state decided to eliminate grocery taxes in the early 2000s. 

“(This is) what happens when we diminish a county’s ability to generate taxation,” Larsen said. “Our locals no longer had that (grocery tax revenue, so) they looked to us to take from the state general fund.”

Now, Larsen said, “by virtue of our actions over the last few years” to lower property taxes in Wyoming, “we’ve reduced, again, the ability for communities to generate revenue” – so once again, local governments “come to us and they say (we’ve) got to increase” the direct distribution.

If the direct distribution continues to rise, Larsen wondered, “where do we cut on the general operations of state government?”

“When we erode the established system set by our forefathers – when we encroach upon how that’s worked really well – we can’t help but then to see it become very complicated,” he said. “So I’m opposed to this.”

Not long after Larsen spoke, however, Wyoming Rep. Steve Harshman, R-Casper, pointed out that, at 5.6 percent, HB 107 would effectively decrease the direct distribution local governments have received for the last two bienniums.

Many of those local governments are already “either working off of reserves to keep the quality of life that our constituents expect and deserve,” or their budgets are “already upside down,” Wyoming Rep. Cody Wylie, R-Rock Springs, said. 

“We really need to think about this, and we don’t want to sell them short,” Wylie said, asking the House to approve the 8 percent amendment. “This is important.”

After hearing those arguments, Larsen returned to the podium to give an additional statement.

“These guys are tough,” he said. “I think they’ve got me. … I’m thinking about my county and lost revenue from not just property tax, but oil and gas production and stuff. I think I’ve got to reconsider (and) be more supportive of my locals.”

He reiterated, however, that the decision is still “going to impact what we do with our state general fund.”

“We just have to accept that,” Larsen said. 

7 percent

After Larson’s 8 percent motion failed, Wyoming Rep. Martha Lawley, R-Worland, proposed the successful amendment that increased the rate to 7 percent in the version of HB 107 that left the House last week. 

Wyoming Rep. Pepper Ottman, R-Riverton, spoke against the 7 percent amendment before it passed, noting that she had met with constituents who supported HB 107 when it was introduced, and “none of (them) asked for another percentage.”

“They said, ‘If we just knew that (a certain amount) would be available each year that we could budget, that would make all the difference in the world,’” she recalled, adding, “As we’re in a budget session, to be making a lot of extra payments here, there, and everywhere before we even go through the budget I see as a little before the fact. Shouldn’t we do our budget and work it through there?”

The House elected to hold a roll call vote on the 7 percent amendment, which received “ay” votes from Larsen and Wyoming Reps. Ivan Posey, D-Fort Washakie, and John Winter, R-Thermopolis, and “nay” votes from Ottman and Wyoming Rep. Joel Guggenmos, R-Riverton.

Spending restrictions

Fremont County’s local representatives split along the same lines when voting on another amendment to HB 107, this time on third reading in the House.

The amendment, which failed to pass, would have prohibited “local government entities from using public funds to pay membership dues to government member associations that primarily exist to influence legislative or administrative action,” Wyoming Rep. Marlene Brady, R-Green River, said when she introduced the proposal.

Larsen encouraged his colleagues to vote against Brady’s amendment, agreeing with earlier commenters that the “optics” of the proposal were “really bad.”

“Each of us chose to run for office to be elected so that we could come down here and somehow influence policy in our own perspective to move things forward, and so here we are, lobbying each other, trying to convince each other that our position is right – (and) we’re getting paid,” he said. “But if our local communities want to do the same thing, we’re saying, ‘No, you can’t do that. You can’t band together like a caucus or a group and come down and try to influence somebody for what you feel is better for the state.’ …

“Certainly they have the right to do that, and certainly they have the right to use the resources that the community who elected them has provided for them to fulfill their obligation as elected people.”

Ottman spoke in favor of the amendment, however, arguing that the direct distribution from the state is intended to support local government operations – not pay for “lobbying.”

Brady’s proposal failed with “ay” votes from Ottman and Guggenmos and “nay” votes from Larsen, Posey, and Winter.

8 percent

It was Wyoming Sen. Ogden Driskill, R-Devils Tower, who proposed the increase to 8 percent in HB 107 during last week’s Senate Appropriations Committee meeting. 

The committee had just heard from Pinedale Mayor and Wyoming Association of Municipalities President Matt Murdock, who explained that HB 107 “gives us the ability to have predictability and stability.”

“(We’re) tired of the biennial argument, or fight, that we get into on how large the direct distribution should be,” Murdock said. “So we’re grateful for this.”

He added, however, that “I’d be much more comfortable with 8 percent.”

Riverton City Administrator Kyle Butterfield agreed that the “proposal to go 8 percent is helpful for us.”

“These funds are important as they support our infrastructure (and) services,” Butterfield told the SAC. “We particularly have focused on our law enforcement effort over the last few years, and the direct distribution monies have been helpful in that regard, replacing police vehicles and also adjusting our salaries.”

Before voting on the amended bill draft last week, Wyoming Sen. Tim Salazar, R-Riverton, who chairs the SAC, called HB 107 a “good move” that gives local government entities more “stability.”

He did caution, however, that “if we have another COVID” or a “serious downturn,” local governments will have to return to the state to request additional funding outside of the newly proposed distribution model.

“I pray that that is not going to be the future of our world, but it could happen,” he said. 

In the current biennium, the direct distribution for local governments was set at $146.25 million, according to Legislative Service Office staff.

At 7 percent, the LSO staff estimated that HB 107 would set the distribution at about $132 million for 2027-2028, while Larson said the 8 percent rate would equate to an estimated $148.8 million direct distribution.

HB 107 was placed on General File in the Senate on Monday.