Mass Revenue Loss for County, Energy Downturn Continues

NARM - courtesy Peabody
Heavy equipment operates at Peabody Energy's North Antelope Rochelle mine in Wyoming's Powder River Basin. (Courtesy Peabody Energy)

Campbell County suffered a $21 million loss in sales and use (S&U) tax revenue at the end of 2020, the result of low production from a struggling energy industry, a recent state report says.

Coal production was down nearly 20% at the end of 2020 from numbers reported in 2019, while oil production decreased by 19.8%, and natural gas production fell by 17.5% according to a Dec. 31 report from the Wyoming Economic Analysis Division (EAD).

Photos courtesy of the Wyoming Economic Analysis Division (EAD)

There were 21 oil and six gas rigs operating throughout the state in 2019, compared to six oil and one gas rig at the time of the report’s publication in December. Mining jobs likewise fell by 6,000 over the previous year, while oil and gas jobs decreased by 3,800, according to the report.

S&U tax collections from the mining sector also decreased in Campbell County by 34% compared to the previous year, costing the county $20.9 million, the report further stated.

Statewide, S&U tax collections from the mining sector showed a 67% decrease, the largest overall decline from the previous year’s figures, which translates to approximately $6.7 million in lost revenue for the state.

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But while jobs in the energy industry fell, statewide employment numbers increased by 2.58%, or 12,200 new jobs since April 2020 when unemployment levels hit an all-time high at the onset of the COVID-19 pandemic.

It’s the second consecutive month that Wyoming has seen an increase in employment, according to the new figures.

Oil and gas prices are also on the rise as the market responds to upticks in demand. At the time of the report, oil prices recorded by West Texas Intermediate (WTI) hovered a few dollars shy of a breakeven price of $50 per barrel.

As of Jan. 25, oil prices have surpassed the breakeven price and are currently sitting at $52.15 per barrel.

Natural gas prices, meanwhile. have decreased slightly from figures included in the EAD report, which were listed at $3.24 per Metric Million British Thermal Unit (MMBtu).

Natural gas prices currently sit at $2.61 per MMBtu, according to a Jan. 25 market report from Business Insider.

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Photo courtesy of Wyoming Economic Analysis Division

 

But despite the glimmers of good news, the lost revenue compounds further on lean projections for the county’s assessed value moving into fiscal year 2021. Those projections prompted the Board of County Commissioners in November to request all county departments slash their budgets by 15-25% in preparation of a billion-dollar shortfall.

Even without taking into consideration the multi-million-dollar S&U tax shortfall, the depreciation in the county’s assessed value could translate to jobs lost in the local government.

The county, however, has promised to do what it must to provide statutorily mandated services and maintain its level of service in other departments, according to talks during a Jan. 19 county manager’s meeting.