Wyoming lawmakers weigh shifting part of state sales tax back to local governments

Don Richards, budget fiscal administrator with the Legislative Service Office, told the Joint Appropriations Committee the review was requested to consider alternatives to the current state/local split of the 4% statewide sales and use tax and to examine the “local government direct distribution model.”

The most immediate policy proposal before the committee is a plan from county and municipal associations to take a portion of the state’s share of the 4% sales tax and run it through the existing direct-distribution formula (commonly called the Madden formula) so local governments receive that money automatically rather than via a biennial legislative allocation.

Why it matters: Wyoming’s current statutory split sends 69% of the 4% sales tax to the state general fund and 31% to local governments. Proponents say memorializing a portion of the state share for direct distribution would give smaller and revenue-challenged counties and towns more predictable funding and reduce the “biennial wrangling” over those payments. Opponents raised concerns about reducing state revenues and about the differing beneficiaries of sales-tax- and property-tax–based funding.

Key facts presented

- Statewide sales and use tax rate: 4% (unchanged since 1993). - Current distribution: 69% to the state general fund; 31% to local governments. The local share is subject to a 1% administrative carve-out and a small guaranteed county minimum ($40,000) before the remainder is distributed. - Direct distribution (House Bill 70, 2024) delivered about $73,125,000 in the most recent year cited. The county/municipal proposal would carve roughly 8% of the state share and route it through the Madden/ direct-distribution model; using 2024 figures the presenters estimated that would generate roughly $77,000,000. - One penny of statewide sales tax raises on the order of $243 million to $250 million (last fiscal-year estimates cited by the Department of Revenue). - Additional local-option pennies: 21 of 23 counties impose a fifth penny; other county-level pennies exist for specific purposes or economic development.

What proponents said

Jeremiah Grama of the Wyoming County Commissioners Association and Ashley Harpstreet of the Wyoming Association of Municipalities urged the committee to “memorialize” the direct distribution by allocating a fixed share of the state portion to the existing direct-distribution formula. Grama summarized the goal as avoiding repeated two‑year budget fights and ensuring predictable funding for smaller jurisdictions.

“I think it’s an important one,” Grama said, urging the committee to design a model that supports “the second and third tiers” of counties that do not generate the bulk of sales-tax revenue.

What state revenue staff said

Brett Fanning and Matt Sachet from the Department of Revenue provided technical context. Fanning emphasized that businesses and the public often confuse the Department of Revenue’s distributions (sales/use tax flows) with the legislative direct-distribution mechanism, and that the two are separate processes. Sachet provided program updates (for example, a property‑tax refund application update) and summarized the Department’s tax collection figures.

Sachet reported that the state portion of sales tax receipts last fiscal year was about $609 million, and the state portion of use tax was about $61 million.

Questions and policy issues raised by committee members

- Whether using sales tax to backfill lost property-tax revenue is feasible: several members and staff warned that municipalities rely more on sales tax while counties rely more on property tax, so a simple transfer could create misaligned beneficiaries. - The stability of the Madden formula and whether it should be adjusted; some county representatives said they do not seek to rewrite Madden but to apply it to an additional carve-out. - Equity concerns: mineral activity and large capital purchases create large swings in collections that concentrate revenue in a handful of counties and municipalities (seven counties accounted for about 70% of sales tax collections in the data shown). - Administrative and statutory details: the departmental speakers urged the committee to consider both sales and use tax statutes (cited as W.S. 39‑15 and 39‑16 in testimony) if they change distribution rules.

Proposal on the table

County and municipal associations proposed leaving the 31% local share intact and additionally carving roughly 8% of the state’s 69% share to be distributed via the existing direct-distribution model (Madden). Advocates said that approach would not raise taxes but would shift a predictable portion of state revenue to local governments in a way that mirrors existing local-distribution mechanics. Using 2024 numbers, presenters estimated that carve-out would approximate recent direct-distribution payments.

No formal committee decision or vote occurred. Multiple members said the material was persuasive enough to request a draft bill at the next meeting, and committee co-chairs suggested they may ask staff to prepare a bill draft based on a consensus percentage (the panel discussed 7–8% ranges during testimony).

Ending note

Committee members signaled they want more modeling (distribution impacts by county/municipality, effects on state general fund and on school funding) before any bill introduction. Department of Revenue and Legislative Service Office staff agreed to provide additional cost and distribution scenarios to inform the committee’s next steps.