Wyoming’s mineral producers are set to begin a slow transition to monthly payments for county-level production taxes, after a heavily amended version of House Bill 159 passed the 2020 legislative session. It is currently awaiting Gov. Mark Gordon’s signature.
The change is intended to financially protect counties from unpaid taxes and company bankruptcies as tax delinquencies accelerate across the state. Counties are now paid biannually and as much as 18 months after production.
Under the current system, counties and state-level reserve accounts bear the risk of company bankruptcies – one they will still largely have to carry during the now-extended transition period.
Buffalo’s Mike Madden, former Wyoming House member and Revenue Committee chairman, was the first local voice advocating for such a switch in committee meetings during the 2015 interim.
This year, Johnson County Commissioner Bill Novotny picked up the torch, lobbying extensively for the measure. Novotny and Deputy County Attorney Barry Crago served on a working group that crafted a draft bill ahead of this year’s legislative session with members of the newly formed Select Committee on Coal and Mineral Bankruptcies.
The version of HB159 that survived the session was markedly different from that initial draft.
Under the introduced version, monthly payments would have begun in January 2021, and companies would have had up to five years to get current on the 18 months of past taxes as they came due under the old system. The version the House passed on Feb. 27 extended the start date to 2023, offered more time for companies to true up and expanded discounts for those that paid early.
On March 5, the Senate Revenue Committee agreed, in a narrow 3-2 vote, on a heavily revised version. It carried more than six pages of amendments by the time it passed the full chamber.
Producers will now begin the transition to monthly payments this fall, under a schedule that gradually spreads the twice-annual payments out across more months of the year.
By the end of 2023, they will reach a full monthly schedule and begin making the equivalent of one extra monthly payment each year.
That will continue until 2027, at which point companies will be paying roughly one year in arears instead of 18 months. Then, the legislators of the future will be able to evaluate how they want to proceed.
Madden made a guest appearance in Cheyenne late in the session, urging the Senate Revenue Committee to support the bill. If it had gotten down to “horse trading” in 2016, he told the assembled legislators, the change was important enough that he would have been willing to offer operators a 30% to 40% discount to get current on their back taxes.
Under the bill’s final version, companies will make no additional payments until 2024. When they do, the increase will be just over 8% each year. The bill retained a provision that allows distressed companies to make individual deals with counties.
Still, some lawmakers spoke against the legislation, saying it would unnecessarily burden producers facing uncertain markets.
“You look at what the market is bearing right now, and boy – I don’t know,” said Rep. Mark Jennings, R-Sheridan, ahead of the House concurrence vote on the bill. “There’s a time and this is not the correct time to do this.”
“If someone’s telling you that this is going to kill the golden goose, that this is going to affect them, that their cash flow is so tight that they can’t gradually work into monthly payments rather than those big payments twice a year, then they’ve got other problems or they’re not being honest with you,” said Rep. Mike Greear, R-Worland, in response to Jennings’ concerns.
The House ultimately voted to send the bill to Gov. Gordon’s desk with a 51-9 vote.