THE BUZZ: Penny for Their Thoughts

By on October 6, 2015

Tax hike for housing, transportation hinges on the ‘hows?’

151007Buzz1Jackson, WY – One of two agenda items at Monday’s joint information meeting between the town and county was a discussion on the public’s possible appetite for an extra penny of sales tax to go solely to housing and transportation. After learning of certain, potentially tricky ins-and-outs of adding a penny to sales tax, electeds quickly became mired in the weeds, as Mayor Sara Flitner put it after 45 minutes into the allotted hour-long discussion.

Part of the challenge in assessing an extra cent to generate revenue for a much-needed housing and transportation problem facing the valley is in how to best present it to voters. If the devil’s in the details, politicians were stuck in a purgatory of unanswered questions Monday.

General-ly speaking

The proposal on the table was a so-called Communities Priority Fund (CPF). The fund, in theory, would generate more than a hundred million pennies annually from taxable dollars spent in Teton County for a dedicated fund set aside for housing and transportation. There are two ways to go about this, county attorney Keith Gingery explained. One way wouldn’t guarantee that money would ever truthfully go toward the valley’s most pressing needs as identified in the Comp Plan and Integrated Transportation Plan, or ITP. The other way could blow up in our faces.

By state statute, the county is allowed to add a maximum 3 cents to the 4 cents of sales tax the state gobbles up on every buck at the cash register. Currently, with one cent going to a local option tax to fund capital projects for the town and county, that leaves two potential pennies on the table for a tax hike. However, one of those additional pennies is already in play funding the last of 2013’s specific purpose excise tax (SPET) items. That SPET penny tax, which generates around $11 to $12 million annually, is set to expire next year.

That leaves the option of raising sales tax another penny to 7 percent in Teton County. Town and county leaders could also decide on a half-cent increase (which would be rounded up by retailers at points-of-purchase) or some other incremental increase. Gingery didn’t fancy that option if it came to using SPET because, while lawmakers were careful to spell out fractional increases were kosher for a general fund tax increase, they weren’t addressed specifically for a SPET tax.

“Legislation doesn’t specify whether a half-penny with SPET is allowable, whereas they do go out of their way to state it’s OK for a general tax,” Gingery said. “While some may argue this represents lazy lawmaking, it usually indicates there was a purpose behind not spelling it out. My opinion would be then that SPET is probably full percentages. If that becomes something you are really interested in we could do more research. If it would be a deal-breaker I would ask for an AG [Attorney General] opinion.”

Aside from the halfpenny quandary, the decision on whether to generate revenue for the Communities Priority Fund via an added general sales tax penny or make it a SPET ballot item presents other dilemmas. Gingery explained that a general tax dedicated for housing/transportation is a misnomer. The revenue generated would go into city and county coffers as general funds. Targeting that cash as “housing” or “transportation” funds would be largely a meaningless ledger sheet entry. That money could be spent filling potholes if municipal managers changed their minds.

“Using a general tax dedicated to housing or transportation does not mean that money has to be used for housing or transportation even if you say it will be,” Gingery warned electeds. “You could pass resolutions or make statements that you are going to use it for ‘X,’ but you could change that to ‘Y’ the next day if you wanted. Certainly, future boards could also decide to use that money differently.”

Town administrator Bob McLaurin agreed that it might be sticky. But he also said rigorous accounting protocol could be implemented to provide tracking and assurance for the public or future civic leaders that pennies headed for housing or buses actually got there.

Gingery suggested a better guarantee that taxpayer money would land safely in the Communities Priority Fund and stay there would be to use SPET. The problem with that is it puts all the eggs in one basket. After county treasurer Donna Bauer strongly urged electeds to put a renewal of SPET on the August 2016 ballot before it runs out, an additional penny sales tax for housing/transportation generated via SPET would mean a total of a two percent SPET moving forward.

Your two cents

Would voters go for that? Or would they lose sight of a strongly voiced community priority if it landed on a SPET ballot between, say, a $10 million request for an additional wing at St. John’s Medical Center and $12 million for a Central Wyoming College satellite campus in Jackson?

“The way Teton County does it – and no other county in the state is this way – is voters are not asked to approve a 1- or 2-cent SPET tax per se,” Gingery said. “They pass it or not by checking ‘yes’ or ‘no’ on each SPET ballot request. If even one item gets a majority vote, you approve the special purpose tax.”

And with SPET expiring next fall, if voters were to shoot down SPET with a Communities Priority Fund attached to it, they will shoot themselves in the foot and lose out on both an additional penny tax for housing/transportation and the usual SPET gravy train.

A few commissioners and counselors, including Flitner and Paul Vogelheim, expressed concern over how a priority fund might fare if stacked up with a grocery list of other wants, along with an anticipated school district bond proposal that would likely be hitting the ballot box in May.

“I don’t know,” Gingery admitted. “I’ve been trying to figure out how voters would perceive that because it would start to look like a lot of taxation going on. But with SPET expiring, you would want to make sure there is at least something on there that everyone would vote for. Otherwise, you lose both pennies. You could separate them out, doing one SPET in May and the other one in August.”

Shaken by the possibility of losing SPET altogether, electeds turned the discussion instead back to a general penny tax. Besides, voiced Jim Stanford, SPET doesn’t cover ongoing operational costs and maintenance as we found out with the library, for instance. SPET guidelines also require money be somewhat targeted at specific projects, though Gingery said they have been allowed to be a bit vague in the past.

Well, which one will last longer, politicians wondered. A SPET item community fund could come with a $12 million price tag, which would require voters to again have to approve such a tax hike again in 2019. Wouldn’t a general tax increase have to be approved every two or four years also, the panel asked?

“Not if we do an F resolution,” Gingery answered, explaining that the tax would simply roll over quietly until an insurrection equivalent to the Boston Tea Party unburied it. Someone would first have to notice they were being taxed an extra penny into perpetuity, then they would have to find five percent of registered voters to agree that sucked and sign a petition to have it put back on the ballot.

General consensus

Flitner, tired of the ways and means of the ad hoc committee, interrupted the discourse to make sure everyone was still on the same page when it came to housing and transportation.

“The Community Priorities Fund means something to me: priorities,” the mayor stated. “I’m open to opinions on how we get there but trying to get everything all at once sends a confusing message to voters that we are in the weeds, and we risk losing it all on an election. I don’t want to fight this at the ballot box.”

Other opinions:

JIM STANFORD – “To me, 1 cent of general sales tax is more valuable than SPET. I think it’s prudent to look in that direction. It allows the greatest amount of flexibility. I know people are saying we are going to raise taxes. We aren’t going to do anything. The voters will decide whether or not to tax themselves. A penny of sales tax (general fund) will provide a decent start to addressing this community’s challenges. And I would also take a real hard look at what we put on the SPET ballot and maybe shave it to a half-cent.”

PAUL VOGELHEIM – “Whatever is decided, and I would be supportive of keeping the current 6 cents, we have to come up with a much more specific use of the money generated. We hear rumors about another $20 to $25 million needed for START and the capital improvement side of Phase II. Do we have a plan for that? A TIGR grant? Also, let’s remember the Lodging Tax is there in the mix.”

BOB LENZ – “I believe in the priorities fund. Let’s start though with making sure we keep SPET. Housing and transportation aren’t our only needs. The one thing everyone I talk to in the community asks when they hear about an extra penny sales tax is, ‘What are you going to do with it?’ People want to know specifics. Are you going to add another bus run or two to Alpine? Are you going to buy land for housing? Where?”

MARK NOWLIN – “I would like to get a little more detail from staff. In terms of the Comp Plan and ITP, the community has been clear and it certainly backs exploring housing and transportation money. START has done a very good job of mapping out their way to the ITP. We might need a little more clarity from other departments to determine what a sixth penny would be spent on.”

HAILEY MORTON LEVINSON – “I think the priority is deciding what we want to do with the current sixth penny on the books. That’s a more timely issue for me. We could also say to staff that top priority is the Community Priorities Fund. It signifies that we want to do something now and then talk about SPET. I don’t necessarily want to put it all together at once.”

SMOKEY RHEA – “When we talk about what our priorities are right now, people who know me know I’m going to say housing. And people like Darren [Brugmann, START Bus director] will say START. When [news about an additional penny to fund both] hit the paper, that penny got really busted up. People began pulling that penny apart. We need to look at as many different funding streams as possible. SPET has traditionally been used to fund our community’s priorities. But we need to look at more than just tax. “

NATALIA DUNCAN MACKER – “As far as the sixth penny on SPET, we might want to start our process sooner than January, at least to determine what the list of SPET ballot items might be next year. That will help us determine whether to put [CFP] as an additional penny general or SPET tax.”

DON FRANK – “I would request to see more details on where SPET money has been historically spent. We are involved in a ‘raising revenue’ discussion right now. What have we said ‘yes’ to, and what have we said ‘no’ to, as a community? To know where we are going it might be useful to know where we’ve been. We really can’t expect the public to vote for additional taxes in any manner or form unless they know exactly what they are getting. As much of a fan of START as I am, we have been cautioned that the kind of goals described for START are not going to be possible unless people choose to get out of their cars. What’s achievable, for how much money, and for how long? This is where we test the courage of our convictions. The Comp Plan represents what the community wants — the proof is when they spend their own money.” PJH

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