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Select Committee Votes to Revive 2016 Legislation

The Select Committee on Coal/Mineral Bankruptcies met today via teleconference to discuss how better to protect Wyoming’s assets during bankruptcy actions. The assets in question are the state’s tax revenues as well as employee payments.

Formed in the wake of the recent chapter 11 bankruptcy filings of three major players in the industry, including Westmoreland, Cloud Peak, and Blackjewel, the committee today directed legislative staff to resurrect previous legislation to address the way ad valorem taxes are collected from the mineral industry.

Currently, ad valorem taxes are assessed annually and paid on a bi-annual basis in arrears, meaning the taxes come due well after the minerals are extracted. It’s a practice that has been highlighted and questioned throughout the course of the tangled Blackjewel bankruptcy proceedings.

House Bill 64, introduced in 2016 by the Joint Revenue Interim Committee, would have changed the annual collection to a monthly collection, which most mineral industry officials believe would further injure an already cash-strapped industry.

“We certainly understand the immediate concern of the counties,” said Travis Deti, executive director of the Wyoming Mining Association. “But I think we should point out that when you look at overall numbers over a period of time, taxes assessed and paid by the mineral industry show a nominal rate of delinquency, and by a reasonable measure, the current system of collection of mineral taxes works.”

Deti said the major sticking point is still the transition period to monthly payments for ad valorem taxes.

Three years ago, HB 64 addressed the difficult transition by imposing a three-year delay followed by a two-year transition period.

Campbell County Sen. Michael Von Flatern and Reps. Eric Barlow and Scott Clem are all members of the committee, which plans to revisit the issue in mid-December. In the meantime, the Legislative Services Office (LSO) will review past legislation dealing with ad valorem payments and draft new legislation for consideration during the upcoming budget session.

If approved, Barlow said he would like to see ad valorem taxes in the state collected in the same fashion as severance taxes.

Committee member Sweetwater County Republican Rep. Clark Stith asked if it was possible for the LSO to evaluate the economic impact of such a transition on the minerals industry and also requested alternative scenarios.

Former Blackjewel employee Rory Wallett spoke during the public comment session of the meeting and likened some of the discussion to the bickering of his four children. He suggested the two camps compromise and perhaps consider quarterly payments as an alternative.

He also proposed Wyoming adopt a law similar to one in Kentucky that requires additional bonding requirements for new companies wishing to operate in the Cowboy State.

Barlow also proposed that as with severance taxes, smaller companies within a specified amount be exempt from monthly tax payments. Currently, companies that pay less than $30,000 a year in severance tax are still allowed to pay annually.

In 2016, HB 64 died on the vine and was withdrawn by Revenue Committee. The 2020 budget session is scheduled to convene Feb. 10.