A legislative committee narrowly advanced a measure on Friday to repeal sales tax on electricity in the midst of rising electrical rates — a $43.4 million annual savings for ratepayers, according to the bill’s fiscal note.

But there’s a huge downside to Senate File 128, “Repeal of sales tax on electricity,” according to critics and even some supporters of the concept.

By far, Wyoming’s largest electrical consumers are industrial users: mines, oil and natural gas producers and refiners, and especially a booming data center industry in Laramie County. Many towns and counties rely on sales taxes from those industries — including from electricity — to support public services, including services those very industries necessitate.

For example, Evansville Police Chief Mike Thompson described the revenue base of his 2,700 person community as more industrial than residential. The Casper-adjacent town, home to an oil refinery and a multitude of other large industrial operations, is almost completely reliant on various sales taxes to support public services.

“It’s going to cripple our community,” Thompson said.

Likewise, Cheyenne has seen wild success in courting manufacturing and data facilities — enterprises whose primary net contribution to the city and county are taxes, Cheyenne Mayor Patrick Collins testified before the Senate Revenue Committee.

“I see data centers as our Jonah field,” Collins said, referencing Sublette County’s famed oil and gas development. “I see them as our Campbell County coal mines. We don’t have great mineral wealth here in Laramie County to fuel our economy, as many parts of our state do.”

Demand for electricity in and around Cheyenne is projected to increase from about 350 megawatts today to 1,200 megawatts by 2030, based on anticipated growth in manufacturing and data centers, according to Collins. “So in today’s dollars, that would cost Cheyenne about $4.4 million if we take the sales tax off electricity,” he said.

Those concerns were echoed by the Wyoming Association of Municipalities and Wyoming County Commissioners Association. They noted that proposed tax reductions for homeowners, as well as a wide range of pending tax reductions for extractive industries, will likely starve small governments of the revenue they need.

All of those anxieties might be assuaged, however, according to the bill’s proponents, including lead sponsor Republican Sen. Troy McKeown from Gillette. Lawmakers are working to partially negate the revenue loss from property tax relief for towns and counties McKeown said. Plus, according to Sen. Cale Case, R-Lander, there are plans in the works to offset local governments’ losses from SF 128 with a new tax that taps electric utilities and their customers outside Wyoming.

“We would export a very large amount of tax burden and we would collect more than the sales tax we’re giving up,” Case said.

Lawmakers discussed such a strategy in April, noting Wyoming is particularly suited to shift the tax burden because it exports more electricity than it uses — although the volume of that export of electrons has been declining in recent years, according to Power Company of Wyoming Director of Communications and Government Relations Kara Choquette, who testified before the committee and participated in interim deliberations on the topic.

Nonetheless, a bill to implement a new tax to offset the revenue loss of SF 128 had yet to materialize by Friday afternoon.

“There’s a bill to be filed in the House that accomplishes — kind of looks at these things so they have to all fit together,” Case said. “It’s complicated.”

Underpinning that potential bill is a report by a legislative “electric tax subcommittee,” which was appropriated $50,000 to hire a law firm to analyse the legality of imposing taxes that extend beyond Wyoming’s borders. The Senate Corporations, Elections and Political Subdivisions Committee, chaired by Case, met behind closed doors with the hired lawyers at the Capitol on Thursday to hear their analysis.

“The purpose of the briefing yesterday was to hear from our lawyers that we hired,” Case told the Revenue Committee on Friday. “So it was privileged lawyer communications.”

Based on that briefing, “It’s clear that we can do that,” Case added. “We absolutely can do that.”

Whether or not such a bill materializes in time to offset revenue losses from SF 128, a bevy of lobbyists, who regularly comment on legislation, said they emphatically support the bill, including those representing Wyoming rural electric co-ops, Wyoming agricultural industries, the Petroleum Association of Wyoming and Wyoming Mining Association. Monthly electricity bills are one of the top expenses for doing business, they testified.

“We have a far larger industrial load in Wyoming than you do residential — that’s not true for most states,” Jody Levin told lawmakers on behalf of the trona industry and the Wyoming Mining Association. “So the increases that we have seen in electricity have been borne largely by your industrial consumers.”

McKeown tested Evansville Police Chief Thompson’s claims regarding the potential impact to his community, and bristled at his pleas for more careful scrutiny of the measure. “It’s actually pretty simple. It just takes the sales [tax] off electricity,” McKeown murmured to a fellow committee member before asking for a vote.

The measure advanced with a 3-2 vote.