During budget presentation, Gordon says he's willing to look at lodging tax

CASPER — Gov. Mark Gordon told lawmakers Monday that he would be “willing” to consider a statewide lodging tax if it came across his desk this winter.

However, in his first budget presentation to members of the Joint Appropriations Committee this week, Gordon declined to entertain any other tax legislation, instead focusing his first hearing on cost-savings as the state faces a future of declining revenues.

Kicking off the first of several weeks of budget hearings, Gordon seemed largely on the same page as leaders of the budget-making committee, pushing a set of budget recommendations he says will slow state spending growth by reducing one-time appropriations and focusing on programmatic cuts rather than dramatic, across-the-board reductions in spending.

“This budget is about how we reshape government to be more efficient and effective moving forward,” Gordon said.

As expected, Gordon spent much of his presentation focusing on cost-savings in the long-term. What was not expected, however, was his support for a new tax.

Gordon maintained throughout his time as a candidate and in-office that he would prefer to avoid any tax increases until all possible cost savings are realized, either through budget cuts or by finding efficiencies in government operations.

Though his half-endorsement of a lodging tax is nothing new — Gordon expressed support for a lodging tax in a news conference earlier this fall – his position comes at an interesting time.

Estimated to generate roughly $19.5 million annually, the legislation was not the most significant revenue bill floated last year. However, the bill was considered to be as close to a self-funding mechanism for the state’s tourism sector as possible, levying fees anticipated to be paid primarily on visitors to Wyoming. If the bill was passed, 80 percent of those revenues would have gone directly to the Department of Tourism, while the remaining 20 percent would have been deposited into a special projects account for tourism-related initiatives.

Despite strong support from the hospitality industry and its relatively easy passage in the House, that proposal was defeated in the Senate on its the final vote this year, in-part over concerns it would heavily impact Wyoming residents as well.

Members of the Joint Revenue Committee surprisingly declined to revive a lodging tax proposal in the interim, choosing instead to focus its energy on a much-more controversial corporate income tax: a proposal that is not only less popular than a lodging tax, but is only anticipated to raise roughly $4 million more per year, according to estimates released this summer by the Legislative Service Office.

However, the governor has expressed concerns that the state’s declining revenues could soon begin to catch up with the state’s inflationary expenditures and, in a press conference at the end of the 2019 legislative session, he expressed disappointment in the Legislature’s failure to pass any significant revenue-generating legislation over the winter.

Even without the committee’s endorsement, Gordon told lawmakers that a lodging tax would likely be the only thing the Legislature could introduce that would gain his support.

“Do I see anything on the table this session I’m willing to look at beyond a lodging tax? I’m not clear,” he said Monday.

At this point, it is unclear whether a lawmaker will sponsor copycat legislation in 2020. As a revenue-generating bill, a lodging tax would have to originate in the House of Representatives and, without committee-backing, would require a two-thirds vote for introduction.

Other highlights

While the first hearing focused primarily on providing a high-level look at the budget, JAC members used their time with the governor to make some of their early concerns clear while providing shape to how conversations around the budget could proceed over the next month-and-a-half. Several defining themes emerged in Monday’s hearings that are likely to come up in the session and beyond, including:

1. Continuing to find efficiencies. From the release of the governor’s recommended budget last month, Gordon has expressed the need for setting a new course for how the state spends its money, focusing less on what the state can afford today in favor of what it can continuously fund in the future. Though recent projections by the state’s Consensus Revenue Estimating Group lack a precipitous decline in revenues, Gordon noted that Wyoming’s earning potential is “on a glidepath” downward, and that the state will no longer be able to afford doing business as it has usually done. While averting the characteristic, across-the-board cuts seen in former administrations, Gordon again reaffirmed the need to find cost-saving efficiencies within government while reducing the amount of money the state spends on a one-time basis, like capital construction.

2. Being honest about revenues. As reported throughout the first year of his administration, Gordon prefers to allow public opinion to dictate the revenue conversation, rather than issuing a top-down decree. However, he wants the public to be informed of the implications of their positions, whether that means roads going without maintenance or buildings going unconstructed. He highlighted his Power Wyoming initiative – an in-depth investigation by state officials to better understand Wyoming’s revenue streams – and better prioritizing spending through reforms like those applied in the State Building Commission, which now uses a sort of ranking system to decide what projects get funded.

3. Funding the rising costs of government. Even with a fiscally conservative posture, Gordon still has to contend not only with diminishing revenues in the future, but with increasing expenses that cannot simply be cut. Education spending, for example, will continue to rise, while the state is facing down a sizable expense from its Employee Group Insurance plan, which is currently running a cash deficit. Though the state lacks the imperatives of a private insurer to make money – all it has to do is break even to work – lawmakers like JAC Co-Chair Bob Nicholas, R-Cheyenne, continuously pressed the governor on ways to get there, including rate hikes or potential decreases to benefits.

4. Being conscious about the money Wyoming does spend. Under Gordon’s budget, education will – once again – be funded largely out of savings, something the governor hopes to avoid under future budgets. But Gordon also expressed a need to be conscious about the state’s federal revenue streams as well, noting that sometimes – in the case of some matching grants – free money isn’t always free.