Ad Valorem Dilemma May Have Just Come To A Close

Feb 4, 2021

Ad valorem taxes contribute to local and state-wide school funds
Credit Pexels

The Wyoming House of Representatives and Senate have agreed on a path forward to solve a problem that has plagued the state for years: ad valorem tax collection.

An 18-month lag in tax collection from the minerals industry has cost Wyoming counties hundreds of millions of dollars over the years, money that would have also gone to state education. Casper Rep. Steve Harshman said counties lost out on roughly $100 million in 2018 out of about $500 million in mineral property taxes, also known as ad valorem taxes.

"We've been kicking this can down the road for twenty years," said Harshman.

Legislatively, that number is closer to five or six years, though the problem itself has indeed been present for longer. The legislation passed acts as the logistical answer to a bill passed last year aiming to align the county collection of mineral property tax with the state version. Now, instead of every 18 months, counties can collect the tax on a monthly basis.

"This is a huge step forward for not only counties, but special districts, school districts. In the long run it'll benefit the energy industry by simplifying the book-keeping," said Bill Novotny, Johnson County Commissioner. His county owed in excess of $30 million in ad valorem taxes.

In addition to some fixes to drafting errors, the final bill saw an amendment to provide $300,000 in state funds to the Wyoming Department of Revenue in order to implement the new system.

Both sides agree the final version was a compromise, but one that's workable going forward.

"I'm glad we have some certainty on it and have a path forward," said Pete Obermueller, president of the Petroleum Association of Wyoming, while adding, "there's still a little work to do on the implementation of it."

Energy companies, the state Department of Revenue, and county treasurers, for example, will all need to adjust to the system.

Novotny agreed there will likely be bugs to iron out during the transition, but he feels it's the right step forward to solve the long-term dilemma. The bill heads next to Gov. Mark Gordon's desk for consideration.

Have a question about this story? Contact the reporter, Cooper McKim, at cmckim5@uwyo.edu.