State Senate makes cuts to direct distribution to cities, counties

WORLAND - Cities, towns and counties could see further cuts from state direct distribution funding after the State Senate amended Senate File 64 trimming another $10 million from the final two payments of the biennium budget approved last year.

Last year the Legislature approved $105 million for the second half of the biennium. Senate File 64 cut the payment to $99.7 million and an amendment last week cut the payment another $5.2 million to $94.5 million. The bill is over on the House side this week as the eight-day virtual session continues.

Sen. Ed Cooper (R-Ten Sleep) voted against the bill during third reading. During debate on the bill last week, Cooper questioned how the state could promise the cities, towns and counties a certain amount and then change the budget in the middle of the biennium.

Sen. Larry Hicks (R-Baggs) said unlike other budgets, such as omnibus water projects, cities, towns and counties have not entered into contracts for the funding. The direct distribution can be cut just like state departments have had to cut their budgets from the approved budget in 2020.

He said if the Legislature applied the philosophy of looking at the budget as a contract with departments and agencies then the state could never adjust budget as the revenue picture changes.

Sen. Chris Rothfuss (D-Laramie) said that under the direct distribution formula and the proposed cuts in Senate File 64, the City of Laramie and Albany County will lose a combined $1.5 million.

He said that the State Legislature needs to provide cities, towns and counties options for raising their own revenue such as another one-cent general purpose tax.

Currently state law allows for cities, towns and counties to add a one-cent general purpose sales and use tax. Additional sales and use taxes must be for specific purposes approved by voters or for economic development.

"We can't keep having this be a state problem. We have to allow them to tax themselves," Rothfuss said. He added that the direct distribution formula does not work when making cuts like these.

"If we are going to make cuts, we need to look at the folks who have money and we have them, those cities and counties with surpluses."

Sen. Drew Perkins (R-Casper) said, "Every budget cut we're going to make is going to affect real people in real life situations and the budget cuts are not going to make their lives better, they are going to make their lives worse but we have a lot of hard decisions to make and this is the first one."

Sen. Brian Boner (R-Douglas) agreed with Rothfus and said it was time for the Legislature to "consider looking at ways local governments can chart their own course without depending on debate from the Legislature."

Sen. Anthony Bouchard (R-Cheyenne) said the state needs to have the conversation of cutting budgets. "We have business owners that may not make it, they are having to cut, families having to cut, how can we not have this same conversation. We have to move it forward."

Worland Clerk Tracy Glanz reported to the council last month that the original cuts to direct distribution would amount to a cut of $80,000 in city revenues.

The direct distribution funding was designed to hold cities, towns and counties harmless after the Legislature exempted food for domestic home consumption from sales tax in 2006, thus cutting into revenues collected by the cities, towns and counties.

The bill passed out of the Senate on a vote of 22-7-1. Cooper was among the seven voting against.

The bill was referred to the House Appropriations Committee meeting, which passed it out of committee on a 7-0 vote Monday. As of press time it was on General File in the House.

The eight-day virtual session is slated for adjournment on Friday.