Ad Valorem Taxes Back In Discussion; Questions Surround Final Transition

May 27, 2020

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

The Joint Revenue Committee began a discussion on how to transition to a monthly ad valorem tax collection schedule. During this year's budget session, legislators voted to slowly shift mineral producers from an 18-month lag in collection to a monthly schedule in order to reduce tax delinquency.

Wyoming is currently missing out on about $130 million in delinquent ad valorem taxes, according to the Wyoming County Commissioners Association (WCCA). Jeremiah Rieman, executive director of the WCCA, said only three counties have no delinquent accounts. The Petroleum Association of Wyoming (PAW) said delinquencies are a tiny percentage of overall taxes paid from the energy industry.

The bill sets a timeline between 2023 and 2027 where companies can slowly close the 18-month gap. It would not close the gap completely, as legislators gave themselves space to reassess the situation after 2027.

Bill Novotny, Johnson County Commissioner, said the delinquent taxes are harmful to his county and that it's important to discuss next steps to move to an up-to-date monthly collection system. He posited closing the gap between 2030 and 2033.

"It is critical for my county and any county that has mineral production across the state that we continue advancing this legislation and provide the technical corrections that need to happen," he said.

At the same time, Novotny said it's been difficult to create a plan with counterparts due to the pandemic.

Legislators and those giving testimony worked through questions with the bill including who is tasked with sending notices to companies or collecting taxes and when counties can negotiate with a delinquent company. Lander Sen. Cale Case said these issues need to be ironed out.

"I'm certainly sensitive to the fact that we need to figure this out fast," he said.

Pete Obermueller, PAW president, said this bill is in fact what the legislature intended to pass. That includes having the Wyoming Department of Revenue, not counties, collect a company's mineral taxes and then redistribute them to counties.

He also said the 2027 trigger is appropriate to consider next steps, saying the full transition to monthly collections provoked questions that weren't ready to be answered.

"The reason why we stopped there is because that runs up against a wall that had us all in a bind during the session about how do we make the final switch because of when valuations happen. At that point, legislators, at that time, we'll have to make a decision about what to do," Obermueller said.

The committee did not take further action on the subject, but revenue co-chairman Dan Zwonitzer said he expects conversation to progress.

"I know nobody's 100 percent on their side and the way they see it, but hopefully we all keep agreeing on the 80 percent as we move forward," he said.

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