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2006 Budget Session
HB 19, together with HB 21, represented the latest in a series of attempts to increase the caps placed by the Legislature on the amount of mineral taxes that are automatically distributed to local governments, highways, schools, and water development. HB 19 dealt specifically with state mineral severance taxes.
Every year, Wyoming receives hundreds of millions of dollars from federal mineral royalties and state mineral severance taxes. Specific percentages of this mineral revenue automatically flow into certain accounts, including local governments, highways, schools, and water development.
This designated distribution of mineral revenue, known as earmarking, was intended to provide the recipient programs with a reliable revenue source and to help distribute mineral revenue among local governments, schools and other programs across the state more equally to benefit citizens statewide.
In 2000, the Legislature established caps on the amount of mineral revenue that could be distributed into earmarked accounts. The 2000 legislation (modified in 2001) specified that the first $155 million received in severance taxes would be distributed to earmarked accounts as usual, but severance tax revenue above $155 million would be directed to the general fund and the budget reserve account.
Local governments - towns, cities and counties - have been particularly hard hit by the caps. In many cases, as mineral revenues have increased, so have the financial needs of towns, cities and counties. Under capped revenue distribution, local governments across the state aren't receiving enough money to cover basic local government needs.
Ever since enacting these spending caps, the Legislature has struggled (mostly unsuccessfully) to correct problems created by the caps.
HB 19 would have increased the cap on severance tax distribution from $155 million to $200 million, so that every year an additional $45 million would flow into the earmarked accounts.
HB 19 also would have modified the distribution of severance taxes revenue under the cap. The bill would have decreased the general fund earmarked portion by 14.01% (from 62.26% down to 48.25%), and would have directed the available 14.01% into a new multi-lane highway account within the state highway fund. The multi-lane highway account would have been used to construct and maintain multi-lane highways in Wyoming.
The Legislative Service Office calculated that these changes would cause local governments (towns, cities and counties) to receive $8.3 million more per year than they presently receive. The highway fund, including the new multi-lane highway account, would receive $30 million more annually, and water development accounts would see an increase of $6.7 million per year.
HB 19 passed the vote for introduction, but died when it was not reported out of the House Revenue Committee by the deadline for committee action.