Cities, counties continue to push for new tax program to make up lost funds

CHEYENNE — Wyoming municipalities and counties continue to urge state lawmakers to place a statewide sales and use tax direct distribution system into state law, rather than updating it every two years.

Local representatives say the current tax systems have been eroded, and their proposed solution will not raise taxes while also giving cities, towns and counties more economic growth opportunities.

On Wednesday, the Wyoming Legislature’s Joint Appropriations Committee met in Dubois to discuss the potential changes.

Currently, sales and use taxes are set at 4% statewide, with opportunities to add 2% of local tax, bringing the total up to 6%, as is currently the case in Laramie County. The tax is not collected on most groceries, prescription drugs and some professional services.

That tax money is sent to the state, where 69% is put into the state general fund, and 31% is distributed back to Wyoming localities, known as direct distribution. Many of Wyoming’s smaller and more rural areas rely on this direct distribution more heavily than in other areas, since their local economy may be smaller and less diversified.

According to the 2024 annual report from the Wyoming Department of Revenue, the state share of the sales and use taxes was more than $671 million, and $301 million was distributed to counties and municipalities. The distributions are made first based on the source of the sale and secondly proportional to population.

Representatives from the Wyoming Association of Municipalities and the Wyoming County Commissioners Association proposed a plan earlier this year to the Appropriations Committee that was further discussed by the elected officials Wednesday.

The proposal maintains the existing 69%-31% split between state and localities, but also dedicates 8% of the state’s share to local governments through the existing direct distribution model. That would equate to about $77 million of the state’s 2024 sales and use tax collection.

Essentially, WAM and WCCA argue that this solution would provide growth potential for towns and counties while not raising taxes and eliminating biennial conversations about direct distribution by placing it into law. They say it also would have little impact on state revenues.

Changing state law in this way would tie local governments to the success of the state government in terms of sales and use tax revenues by receiving a fixed percentage every year, they argue.

“Wyoming municipalities are very dependent on sales and use tax revenues. We are doing it now, and we’re ready to continue to share in the state’s economic cycle on a local level,” said Ashley Harpstreith, executive director of WAM. “... This really moves us to a stable tax structure for local governments, and we just very deeply appreciate this consideration.”

Dubois Mayor Patricia Neveaux shared with the committee how important direct distribution funds have been for her community, and how an increase would continue to benefit the area.

She said her town just received $97,000 in those funds, which helped replace the $84,000 the town would have received from property taxes prior to property tax reductions coming out of the 2025 legislative session.

The $97,000, she said, will go directly into the Dubois general fund to be used for property maintenance, community center upgrades, replacing heat pumps, and repairing sidewalks and streets.

“None of these funds will go into our enterprise funds, so we will just use them for our day-to-day operations,” she said.

For many communities across the state, seeking other funding sources like this is vital to stay afloat following a slew of property tax cuts over the past two years. This includes measures like a 50% long-term homeowner exemption and a 25% property tax exemption on a single-family home for the first $1 million of fair market value.

Don Richards, the budget and fiscal administrator for the Legislative Service Office, said there are pros and cons to this proposal.

First, he said it would provide more certainty for local governments in terms of planning, as sales and use taxes are inherently tied to inflation, tying local governments to the rise and fall of the state’s economy.

He said that over the past 25 years, Wyoming has experienced only six years of a year-to-year decline in statewide sales and use tax collection. 

On the other hand, he said, this could be considered a “re-earmarking” and remove the Legislature from the oversight of this policy.

“I think the group decided that the best way would be to transfer the 8%, or whatever amount you determine, from the Department of Revenue, who is collecting this tax, to the Office of State Lands once per year,” he said.

He said that’s because it doesn’t require any new programming, and there will be no fees in the Department of Revenue, saving some money. Second, he said this move would also be efficient because the Revenue Department is already familiar with the formula used to determine how direct distribution funds are allocated.

Bret Fanning, director of the Wyoming Department of Revenue, said the proposal would eliminate any additional programming from his department, which means it would no longer need to be involved in the process.

The committee did not ask the LSO to draft legislation to consider at its next meeting in October in Cheyenne, but members expressed interest in continuing these conversations and finalizing a bill draft in their final meetings in December and January before the Legislature’s budget session, which begins in February.

This story was published on August 21, 2025.