(Fremont County, WY) – The half-percent (also commonly called half-cent) sales tax for economic development passed during the 2020 election cycle and will be back on the ballot in November 2024.
Since April 1, 2021, sales tax collections have been used to fund countywide transportation services (30 percent) and grants for economic development projects (70 percent).
Some community members have questioned how that 70 percent has been spent since it has funded various projects across the county from businesses, organizations, and nonprofits.
This raises the question of whether or not this half-percent sales tax will pass for another four years, which could leave transportation services, particularly the airport, in limbo.
Airport closing?
Central Wyoming Regional Airport in Riverton relies heavily on the sales tax, a full 20 percent goes toward the airport. This, in general, relieves municipalities and the county of the funding burden.
It was shared by Riverton City Administrator Kyle Butterfield at a Riverton Economic & Community Development Association (RECDA) meeting that there is a possibility the airport would close within a year if the half-percent sales tax did not pass this year due to the county and municipalities very likely not being able to pay the minimum revenue guarantee (MRG), which is projected to be $1.8 million. The MRG is what the airline, currently SkyWest, requires to fly.
Through a capacity purchase agreement (CPA), the State of Wyoming pays 60 percent of the MRG for Gillette, Sheridan, Riverton, and Rock Springs, and the local communities must contribute the remaining 40 percent.
The only way SkyWest flies is one of two ways: either we pay the MRG as agreed in the contract, or they agree to fly at risk, which means they assume it, and we only pay our revenue side. They’ve already told us in the past they wouldn’t do that, according to Kevin Kershisnik, member of the Forward Fremont County PAC and Fremont Air Service Team (FAST).
Even if the airport were to temporarily close and the TSA were to withdraw, it would be almost impossible to get them back, Kershisnik continued.
2019
The FAST sought a solution for Riverton, Lander, and Fremont County’s ever-dwindling budgets. They needed a way to cover the MRG.
Before the tax passed, Lander, Riverton, and Fremont County each spent about $200,000 annually to help cover the MRG, Kershisnik said.
In 2019, revenue was low, budgets were “upside down,” and FAST had to figure out a sustainable way to operate the airport.
“We said, you know, we have to do something,” Kershisnik explained. “So that’s when we started looking at what are our options. What’s a viable long-term option to ensure we can have commercial air service? And that’s when we came up with the sales tax for economic development.”
They did an analysis in 2019 based on the total revenue and what the MRG would cost in 2020.
“We said, ‘Okay, this is what we’re going to collect from the sales tax,’ which was $880,000, and we said, ‘Okay, that would be enough to cover our 40 percent (the CPA).'”
The tax passed, and they no longer had to take money out of the general fund for Riverton, Lander, or the County because they were covering it through the sales tax.
Increasing costs
The MRG cost has increased over the last four years due to variable fuel costs, pilots, infrastructure, etc.
“All these increased that block hour rate,” Kershisnik said. “So now the MRG increased, and these are rough numbers, but you know what used to be $880,000 is now probably $1.8 (million) is our best estimate as to what the MRG will cost us as a community per annum.”
No more tax
If the sales tax doesn’t pass and there is no projected $1.8 million, ideally coming from this sales tax to cover that MRG, they return to Riverton, Lander, and the County for funds.
With the three of them barely able to scrape together funds in 2019 for the lower MRG, it’s uncertain if they could split the projected much higher cost.
Fremont County Commissioner Chair Larry Allen said it’s unclear if the County could afford the MRG and that we must determine our priorities.
“The airport is for sure a big priority,” he said. “It does a lot of economic good as far as economic structure coming in and people visiting and traveling and so on and so forth. And it has a huge impact on economic development. But then again, you know, I guess we’ve got to get our priorities straight, how we’re going to do that, and pay for the ambulance. … It depends on what the MRG amount is and what the total is, and how the grant with WYDOT to help pay for part of that MRG, how that will shake out.”
Kershisnik agrees with what was said at the RECDA meeting previously mentioned.
“I think the probability is high, very high, that we will be without commercial air service if this tax does not pass for another four years.”
Changes to disbursements
Dubois, Hudson, Lander, Pavillion, Riverton, and Shoshoni receive transportation and economic development funding. Fremont County also receives funding from which the Wind River Reservation may draw for economic development projects.
The sales tax funding is disbursed based on the population numbers in the county and municipalities. The greater the population, the greater the funding. This is why the county has the greatest disbursement.
A memorandum of understanding (MOU) was approved at a recent Fremont County Association of Governments (FCAG) meeting to change those percentages if the sales tax passes again this fall.
Instead of 30 percent for countywide transportation services and 70 percent for economic development projects, the new breakdown would be 60 percent for transportation services, 20 percent for ambulance services, and 20 percent for economic development projects.
Restrictions
Since the formation of committees that disburse the economic development funds, almost all of the ways the funds are reviewed and distributed have changed.
“Not every project I agreed with, and I think pretty much all the municipalities have changed their rules as far as giving out money and for valid reasons,” Allen said. “And I think it’s done some good.”
Resident cost
For fiscal year 2024, $4.4 million is the sales tax collection, and then that’s the distribution coming back to the county, according to Kershisnik. 100 percent goes down to the state, and 99 cents on the dollar returns.
If we break that down to how much it costs each resident per year—$4,400,000 and 40,000 residents, roughly in the county—it’s $110 per year. That doesn’t consider things like tourists and the weight of different purchases made by residents, such as buying a new vehicle.
$21 million a year
A study with similar numbers was done in 2020 and 2010, shared Kershisnik. It said the economic impact of having the airport here is $21 million a year. That’s direct, indirect, and influenced impacts.
As for the economic development projects and transportation impacts, there is a $3.91 return on every dollar put into them.
“That’s a phenomenal return,” Kershisnik said.
For the ones that have been pledged monies, such as the hospital, but have not received and deployed those yet, that goes up to $7.34 per dollar spent.
“It’s just a huge economic impact for those projects.”
Across the State
Goshen County is the only other county in Wyoming with an economic development sales tax. They have had the quarter-cent sales tax since 2006, with the exception of one election cycle early on when it didn’t pass.
County 10 caught up with Brayden Connour, who was the CEO of GoGoshen at the time of our conversation.
“We really try as best we can to do good things with that money,” he said. “And do what we can to better Goshen County.”
While Goshen County does not have public transportation, such as a bus line or an airport, it does utilize the returned sales tax dollars to reinvest in its communities.
GoGoshen is an umbrella for entities such as the Chamber of Commerce. It utilizes a similar process for receiving economic development funds: application, review, and disbursement.
Connour shared a few thoughts about the impacts of the sales tax:
“I would hope that the people would reelect it. If you break it down to the per capita, it probably is next to nothing for an individual investment. And you know, the one thing that I can appreciate about it is it stays directly in our community and in our county. And I think we all strive to live in communities that reinvest in itself, and so that’s exactly what this is doing it’s just reinvesting.”