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Bill to fund roads with severance tax on hold

Jan 18, 2013 - McClatchy Newspapers

CHEYENNE -- A bill that would use some of the state's severance tax money to help fix highways and roads in Wyoming is on hold.

The Senate Revenue Committee voted 4-1 Thursday to table Senate File 109. The bill would take part of the mineral severance tax money that goes into a state savings account called the Permanent Wyoming Mineral Trust Fund and use it to fix state highways, county roads and municipal streets.

"We've been struggling with this issue on how to increase funding to our highways over the last couple of years now," said Sen. Stan Cooper, R-Kemmerer, a co-sponsor of the bill.

The bill would divert half of 1 percent of severance tax money that goes to the trust fund and use it this way: 75 percent would go to state highways, 20 percent to county roads and 5 percent to municipal streets. The other half percent still would go into the trust fund.

A half percent of severance tax on all oil, gas and coal would raise an estimated $71.4 million in fiscal year 2014, based on information Cooper provided. Of that, about $53.5 million would go to the highway fund, $14.3 million to county road funds and $3.6 million to municipal street funds.

The bill would go into effect July 1 and impact severance tax distributions in fiscal year 2014, which starts July 1, 2013.

Sen. Michael Von Flatern, R-Gillette, is a member of the Senate Revenue Committee. He said the state could lose about $3.5 million annually in interest (based on a 5 percent interest rate) because the money would be diverted from the trust fund account.

"We're setting up industry to take care of our bills," he said, adding he has a philosophical disagreement with that approach.

But Rep. Patrick Goggles, D-Ethete, a bill co-sponsor, said using a portion of the severance tax would provide a consistent source of money to fix roads. He had a similar bill in the state House but said he withdrew it so he could participate in Cooper's bill.

"I believe this issue needs the dialogue for us to talk about the kinds of revenues that are available to us," Goggles said.

The investment loss is negligible compared to having a predictable source of money to fix roads and highways, he said.

Rep. Robert McKim, R-Afton, agreed with Goggles that the bill is a good solution to establish a continuous revenue stream for the highway department.

Ken Hamilton of the Wyoming Farm Bureau Federation also supported the bill.

"This gets to a mechanism to help the highways without going back into the pockets of citizens," he said.

Sen. Cale Case, R-Lander, a member of the Senate panel, said the bill is an option, and it may be a good idea to keep it on the table. But he said lawmakers have been urged to save money because of the economic downturn.

Committee member Sen. Fred Emerich, R-Cheyenne, said he has concerns about taking the money out of savings, as well as losing the interest.

But committee member Sen. James Anderson, R-Casper, said the money is needed right now to help fix the roads.

"We have a serious problem here," he said, adding the bill would allow the state to continue to save severance tax money.

The committee tabled it to see what happens to House Bill 69, a bill that would raise the fuel tax by 10 cents a gallon. HB 69 is expected to be considered on third and final reading in the House as early as today.

Anderson voted against tabling SF 109.

"The highway department needs every bit of this money and more. This bill should pass no matter what happens to the gas tax bill," Anderson said

Cooper said the bill would raise about as much as HB 69.

SF 109 is an "and/or" bill, Cooper said. It could be used in addition to the gas tax bill. The Legislature also could choose one bill or the other, Cooper said. "It's a way to get some highway work done by not hurting other commerce in the state."

The last day SF 109 could be acted on is Feb. 1, according to committee Chairman Sen. Ray Peterson, R-Cowley.

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