Recently, the Wyoming Association of Municipalities produced its first Municipal Finance Report in an effort to address Wyoming’s economic downturn and potential solutions for the long-term financial health of cities and towns.
This report was compiled by a team of Wyoming municipal leaders forming a Municipal Finance Task Force that met throughout the summer. Representatives from Casper, Cheyenne, Jackson, Lander, Laramie, Sheridan, Cody, Upton, and Green River, along with the WAM staff were tasked to come up with an action plan to review, analyze, and develop recommendations related to municipal finance in Wyoming. This included a review of current state to municipal funding mechanisms, examining sources of available municipal revenue, considering typical and mandated municipal expenses, evaluating other national municipal funding models, and preparing reasonable recommendations for presentation to the governor and legislature.
Between the decisions and direction at the Federal level such as the EPA’s Clean Power Plan greatly impacting the coal industry and a global over-supply of oil and natural gas reducing the drilling and extraction industry, Wyoming has been facing an unprecedented and seemingly long-term reduction in mineral extraction royalties and taxes. Wyoming’s 99 communities have also been experiencing a quick and drastic reduction in sales and use tax receipts typically generated frompersonal and business sources. These declines of local sales and use tax revenues have been as great as 50 percent over the previous years’ receipts.
However, to the Wyoming resident, the link between the downturned economy and unplowed streets or large potholes in the roads, is often not understood.
“The 2016 legislative budget session combined with the current economic downturn made it clear that cities and towns need to be proactive and collaborative in finding more stable funding solutions,” Cheyenne Mayor and WAM Board Member Rick Kaysen, said. “In June, WAM engaged a state-wide committee of municipal representatives to research and develop recommendations for us to share with state governmental leaders and legislators specific to municipal funding.”
Wyoming has 99 incorporated municipalities, 19 of which are First Class Cities, and 80 of which are towns. Their population ranges from four to 63,335 residents. Of the 99, nearly one-half are under 500 in population. The diversity in communities and the different challenges and impacts of each means there is no one-size-fits-all for funding solutions.
Municipalities are funded primarily from sales and use taxes and state-shared revenues and programs. Both of these income streams are volatile in nature, making it challenging for municipalities to meet the expectations and needs of their residents.
The Municipal Finance Report addresses the history of sales taxes, current state-shared funding mechanisms, services expected from cities and towns, and provides eight recommendations. It is meant to serve as a resource as well as an action plan.
We are experiencing a drop in our sales tax revenues from this time last year, and the over-the-cap and one-time funding we receive from the state was also cut this year.
We are at 2003 levels of funding, but providing services at 2016 levels of expectations.
We must come up with a balance. WAM acknowledges that funding for Local Government will only become more challenging in the coming years, and the submission of this report creates a proactive resource to initiate change that will collaboratively manage Wyoming through these difficult times. Understanding municipal finance is complex and oftentimes unique to the community. Wyoming municipalities are statutorily bound to the revenues they receive and may generate. Moreover, municipalities are statutorily required to maintain balanced budgets. This is challenging when revenue streams are unpredictable and expenses ever increasing.
You can find the report at the below URL address. It provides a good history of municipal revenues and direct distributions from the state to local governments and touches on the complex appropriation system that was created to fund them.
We hope that the report completed through WAM will create the talking points and the direction we need as communities because communities that don’t matter don’t exist. WAM’s Municipal Finance Report can be found at http://www.wyomuni.org.
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