Statement for the Record
by Senator Michael B. Enzi (R-WY)
on “The President’s Fiscal Year 2011 Budget”
February 2, 2010
Senate Finance Committee
Mr. Secretary, I appreciate your appearance before this committee today because I have some very pointed questions for you.
After reviewing the President’s budget proposals for the upcoming fiscal year, I’m struck by one thought: what on earth did the people of Wyoming do to anger this Administration?
As a former mayor and state legislator, I know how tough it is to craft a budget that pleases everyone, but after reviewing President Obama’s blueprint, I can‘t help feeling that the people and businesses of Wyoming have a giant bulls-eye on their back.
Between the elimination of tax preferences for traditional energy sources like coal, oil, and natural gas, the elimination of statutorily promised payments from the Abandoned Mine Land Trust Fund, and the increase in the marginal individual income tax rates, Wyoming will be hard-pressed to see an end to this recession any time soon—all thanks to this Administration.
Perhaps you and your colleagues are unaware the importance of the energy industry to the Wyoming economy and the major role Wyoming’s coal, oil, and natural gas play in supplying energy for the rest of the United States. Permit me a moment to enlighten you.
Mining is one of the largest industries in my state. Nearly 1 in 12 workers is employed in the sector and even more hold jobs in the supporting industries. The same holds true for the petroleum industry, where 1 in 12 adults are directly employed. Both industries provide some of the highest paying jobs in the state. The average employee in the coal industry earned more than $75,000 in 2007 compared to the statewide average of $39,245, and it is estimated that the petroleum industry has an annual payroll of $1 billion in Wyoming alone.
Wyoming’s energy production also contributes substantially to our state’s tax base. In fiscal year 2007, oil and natural gas production contributed more than $2.2 billion to state and local governments.
At a time when the Administration is preaching about the need to create jobs, the budget proposals promote policies that are designed to kill jobs in states like Wyoming.
Continuing traditional energy production is clearly important in Wyoming, and my constituents tell me that these proposals will impact their ability to produce energy, employ people, and collect local, state, and federal energy taxes. However, it isn’t only my home state that benefits from Wyoming’s energy production. That production can help fuel our nation’s economic recovery by ensuring that other states have clean, reliable, and affordable domestic energy.
Wyoming’s geologic basins contain some of the largest fossil fuel deposits in the United States. The state’s estimated recoverable coal reserves are second only to Montana’s, and its dry natural gas reserves and crude oil reserves are among the largest in the nation. Wyoming has over a dozen of the nation’s largest oil and gas fields, including the Pinedale Anticline and the Jonah natural gas fields, which rank among the top ten in the nation.
The Powder River Basin in northeastern Wyoming is the largest coal-producing region in the Nation, accounting for nearly two-fifths of all coal mined in the United States. Powder River Basin coal seams are thick and facilitate surface mining, making extraction easy and efficient. As a result, the price of Powder River Basin coal is less than that of coal produced elsewhere in the United States. Powder River Basin coal also has lower sulfur content than other coal varieties, making it attractive for electricity generators that must comply with strict emission standards.
More than thirty states receive coal from Wyoming, and several mid-western and southern states are highly or entirely dependent on Wyoming supply. States that use coal to generate electricity have substantially lower energy prices than states that choose other sources, and as we seek to promote economic recovery, we should be working to keep energy prices low instead of promoting policies that will lead them to increase.
The Administration’s proposals to eliminate all tax preferences for traditional energy will cost Wyoming jobs, will increase energy prices in my state and across the nation, and will keep more Wyomingites out of work. Simply put, the Administration’s proposals on fossil fuels strike at the heart of my state’s economic engine and our nation’s energy supply.
The President’s plan to raise the top two marginal income tax rates will have a negative impact on two more important Wyoming industries: agriculture and tourism. Many of the ranches and the small businesses that support tourism in the state (hotels, restaurants, etc) are family-owned businesses and are structured as limited liability corporations, partnerships and occasionally, subchapter-S corporations.
Because they earn more than $250,000 annually, you call these taxpayers “wealthy.” But you and I both know that many of these small businesses see very little of that “profit.” Instead, it is reinvested in the business.
During a trip home last year, I visited a restaurant that started in Gillette, Wyoming and over the years expanded to eight different locations. At the location I went to, one of the owners happened to be there. We started chatting and he proudly admitted to me, “We started this business on $2,000. Now we have eight stores, and we still have only $2,000.” That’s because everything has been plowed back into the business, creating more jobs and income for the people of Wyoming.
When you tax the ‘wealthy” you think you’re taxing Wall Street fat cats – and you are – but you’re also penalizing the small, independent business owner. For this reason, I plan to offer an amendment to the legislation extending the lower marginal rates that would preserve the 2001 tax rates for small business and I hope it will have the President’s support.
President Obama once said the federal budget didn’t need a hatchet, it needed a scalpel. As you press for the changes I highlighted today, I hope you will grasp that scalpel and use it to protect Wyoming jobs.