For Wyo’s untaxed generations, the ‘free ride’ may be over
So declares a headline on WyoFile.
This articles has an interesting item about Wyoming's tax system prior to the severance tax, that being:
I'd never heard that. I do recall that at the time people were upset about the severance tax, or at least a lot of legislators were, as there was fear that it would end coal production in Wyoming. The article notes that:
Wyoming legislators at the time, like future Gov. Ed Herschler and future U.S. Sen. Alan Simpson, initially opposed the governor’s severance tax proposal. But when Hathaway challenged them to figure out an alternative, they admitted they couldn’t, and they passed the tax.
I'll be frank. I don't know what to do regarding Wyoming's state budgetary woes. I'll note, however, that so far the state has been unwilling to look at anything much which was based on the hope that things would return to "normal". Wyomingites are acclimated to looking at taxation this way. Indeed, we used to proudly hear that Wyoming had "500 years" worth of coal resources, whatever that meant.
What now seems plain is that coal is on a long term systemic slide. Indeed, it was even at the time we started to first tax it. It's becoming additionally clear that petroleum may be entering an analogous condition, something we would have regarded as simply impossible only a few years ago. Petroleum production was increasing on a massive scale a decade or less ago, of course, and that could come back. But something is changing. Within the last few years, indeed within the present Administration, the country was proud of having reclaimed its status as an energy exporter for the first time in decades. Now, however, a Saudi Arabia/Russian price decline, combined with oversupply (which has decreased this year) has made the market highly valuable. More significantly, however, there's very open talk at the national level of a technological phase out of petroleum as a motor vehicle fuel.
That, as a technological matter, seemed like an absurd suggestion itself until only recently. But now electric cars are coming on strong. Ford is introducing an electric Mustang and has an electric F150 slated for 2022 or 2023. General Motors is introducing a light electric truck under the Hummer name. Chrysler has been pretending to hold back, having a sector of the truck market that is slated towards heavy trucks, which electric vehicles have not yet penetrated, but at the same time its introducing an electric Jeep. If Ford makes headway in the light industrial market with its F150 Chrysler will jump in, it'll have to.
Critics still scoff at the vehicle developments, and there are some real problems there. The one we hear here is that they don't have the range to be useful for the state's vast distances, but they're starting too. Indeed, while its never noted, their present range frankly exceeds that of early gasoline engined vehicles, the real difference being, of course, that you could take your fuel with you in the latter case. But they're developing rapidly. I have a range of 600 miles or so in my diesel 1 ton pickup, which compares with an advertised low 300s with the new Hummer, so the electrics aren't there yet, but they'll soon be. If nothing else, they're exploring what the market is and will start capturing sections of it soon.
The real irony of electric vehicles, which isn't missed by their critics, is that they're not really all that green in that they're not really necessarily "zero emissions". Indeed, electric vehicle are, if you will, energy vampires in that they suck their energy from something else generating it, as opposed to petroleum fueled vehicles which carry their own power plants. In the case of electric vehicles, they're only as green as the remote power plant that produced the energy they store in their batteries.
In fairness, that's become greener over the years, which takes us back to the story of coal. Coal's been heavily supplanted by natural gas, which requires drilling, we'd note. There should be, therefore, continued drilling for gas in the U.S. and indeed their has to be, as its largely non transported save by pipelines.
The dream, of course, of Green New Dealers is green electrical generation, and that has been coming on in the form of now viable wind and solar. Indeed, in this area I continue to hear from those who don't want any changes that wind isn't economically viable. Oh yes it is, and it has been for some time.
What would really push electricity for transportation over the top is nuclear energy. The fact that greens don't support it shows how unrealistic people could be. The US could generate 100% of its electrical needs through nuclear and its much safer than coal in real terms. Indeed, the US could have surplus capacity through nuclear energy even it it required the electrification of the railroads. Joe Biden spoke, in the recent debate, of having the US switched over to electric vehicles by 2035. I'm not suggesting it, but a real "New Deal" type program involving nuclear energy could do it in less than less than half that time.
Uranium is mined in Wyoming, or it was, so there would be some hope of regaining a revenue source there, if reason prevailed. Absent that, we're going to have to start taxing wind and solar, but we can't at a rate that would harm them as new entities. There have been proposals to do that, but once again they're sometimes advanced by people who really simply hope to kill them, which really would achieve what the opponents of Stan Hathaway feared in the late 1960s, driving an industry elsewhere. Right now we don't know how much money there will come to be in those sources. It might be quite a bit, and perhaps that will solve our budget woes.
Or maybe it won't. Indeed, it probably won't.
So what then?
It's interesting that agriculture carried the freight before the extractive industries. And that likely was as it was making more money per capita than it does now. Some serious examination should be given to reviving that situation while we still have the money to do so. Long term economic planning doesn't seem to be our forte, however, or we would have picked up the Occidental lands while we could have, which we didn't. We've noted that here before.
Where we're headed in the country right now with agricultural commodities is really hard to say. The United States has had a "cheap food" policy since after World War Two and it appears intent on keeping it. Cheap food is great for everyone, but it's greater for those consuming than those producing and its driven agricultural consolidation and monoculture. One thing Wyoming could do is to try to boost the mid and downstream aspects of agriculture, which we haven't done much of. That is, we don't have large commercial meat packing here, we don't have wool mills and so on. That may seem like not much, but it could be a lot, if done right.
If we're talking about agriculture and taxes, of course, we're into a new area that I didn't explore before. And if we're talking ag, what that means is that we're really looking at a mixed tax base, based on taxing production. Indeed, taxing wind and solar (and severance taxes) is really the same thing, but this would be on a broader basis.
Prior suggestions to tax production of every kind has been really hostilely received, however. Certainly a proposal to tax services, such as legal services, was hugely opposed some years ago.
About the only things left to tax, however, is land and income. There's little support for taxing property rates at an increased level, but I do have to wonder what would be the case if it was graduated. An effort like that would be specifically designed to tax the extremely wealthy and I suspect most Wyomingites would welcome that at some level. As far as I know, that's never been suggested so there's no way to know. People might resent the suggestion as unfair.
That leaves income taxes, which there is no present support to impose. I suppose it also leaves sales taxes, which there's no support to increase.
None of which addresses the cost of government itself. With no money, it'll have to shrink, there's no other choice. And given where we're presently at in this discussion, that seems inevitable. But how that will be done is yet to be seen. We will, I think, be seeing it in the very near future.
Which takes us back to the 1960s.
I was around in the 1960s, to be sure, but I don't recall much about state government and its funding woes. Shoot, I was seven years old when 1970 arrived, so I wouldn't.
I'd guess that the budget problems persisted into the early 1970s, but again, I don't recall much about that sort of thing. How much smaller was our government back then?
It's something we should begin to ask. At the state level, rather than the Federal one, everything has to be paid for. The state passed up on acquiring economic land, which will likely be to our huge regret really rapidly. We could likely have brought in large sums through it, but now we won't. And we don't have any immediately clear path out of where we are. That may mean a return to budgets of the past.
But what does that mean?
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