By james art 
A legislative committee narrowly advanced a measure Friday to repeal the electricity sales tax amid rising power rates — a $43.4 million annual savings for ratepayers, according to the bill’s fiscal memo.
But there’s a huge flaw in Senate File 128, the Electric Sales Tax Repeal, according to critics and even some supporters of the concept.
By far, Wyoming’s biggest electricity users are industrial users: mines, oil and natural gas producers and refineries, and a particularly booming data center industry in Laramie County. Many cities and counties rely on sales taxes from these industries — including electricity — to support public services, including services that these industries need.
For example, Evansville Police Chief Mike Thompson describes the revenue base of his community of 2,700 as more industrial than residential. The city, adjacent to Casper, home to an oil refinery and numerous other large industrial operations, is almost entirely dependent on various sales taxes to maintain public services.
“It’s going to cripple our community,” Thompson said.
Likewise, Cheyenne has had tremendous success courting manufacturing and data facilities — businesses whose primary net contribution to the city and county is taxes, Cheyenne Mayor Patrick Collins testified before the Senate Revenue Committee.
“I see data centers as our Jonah field,” Collins said, referring to Sublette County’s famed oil and gas development. “I see them as our coal mines in Campbell County. We don’t have great mineral wealth here in Laramie County to fuel our economy like many parts of our state do.”
Electricity demand in and around Cheyenne is expected to grow from about 350 megawatts today to 1,200 megawatts by 2030. based on expected growth in manufacturing and data centers, according to Collins. “So in today’s dollars, it would cost Cheyenne about $4.4 million if we eliminated the electricity sales tax,” he said.
Those concerns were voiced by the Wyoming Association of Municipalities and the Wyoming Association of County Commissioners. They noted that the proposed tax cuts for homeowners, as well as a wide range of upcoming tax cuts for extractive industries, are likely to deprive small governments of much-needed revenue.
All of those concerns can be mitigated, however, according to the bill’s supporters, including lead sponsor Republican Sen. Troy McKeown of Gillette. Lawmakers are working to partially reverse the loss of revenue from property tax breaks for cities and counties, McKeown said. Plus, according to Sen. Cale Case, R-Lander, plans are in the works to offset local governments’ losses from SF 128 with a new tax that affects electric companies and their customers outside of Wyoming.
“It will cripple our community.”
Evansville Police Chief Mike Thompson
“We’re going to export a very large amount of tax burden and collect more than the sales tax that we’re giving up,” Case said.
Lawmakers discussed a similar strategy in April, noting that Wyoming is particularly well-suited to shift the tax burden because it exports more electricity than it uses — although the volume of those electron exports has declined in recent years, according to the Power Company of Wyoming’s director of communications. and Government Relations Cara Choquette, who testified before the committee and participated in interim hearings on the topic.
Regardless, a bill to implement a new tax to offset the loss of 128 SF of revenue had yet to materialize as of Friday afternoon.
“There’s a bill that needs to be introduced in the House that accomplishes — kind of addresses these things, so they all have to fit together,” Case said. “It’s complicated.”
At the heart of this potential bill is a report by a legislative “electricity tax subcommittee,” which was allocated $50,000 to hire a law firm to analyze the legality of levying taxes that extend beyond Wyoming’s borders. The Senate Corporations, Elections and Political Subcommittee, chaired by Case, met behind closed doors with the hired lawyers at the Capitol on Thursday to hear their analysis.
“The purpose of yesterday’s briefing was to hear from our lawyers that we hired,” Case told the Revenue Committee on Friday. “So these were privileged attorney communications.”
Based on that briefing, “It’s clear we can do this,” Case added. “We can absolutely do this.”
Regardless of whether such a bill materializes in time to make up for the revenue losses from SF 128, a group of lobbyists who regularly comment on the legislation said they strongly support the bill, including those representing Wyoming Rural Electric Cooperatives, Wyoming Agricultural Industries, Petroleum Wyoming Association and Wyoming Mining Association. Monthly electricity bills are one of the biggest costs of doing business, they testify.
“We have a much higher industrial load in Wyoming than you do residential — that’s not true of most states,” Jodi Levin told lawmakers on behalf of the trona industry and the Wyoming Mining Association. “So the increases we’ve seen in electricity have been largely absorbed by your industrial users.”
McKeown tested Evansville Police Chief Thompson’s claims about the potential impact on his community and bristled at his pleas for closer scrutiny of the measure. “It’s actually quite simple. It only takes away sales [tax] turn off the electricity,” muttered McKeown to a fellow committee member before asking for a vote.
The measure passed on a 3-2 vote.