Committee Works Towards Codifying Faster Ad Valorem Tax Collection System

Jan 20, 2021

Ad valorem taxes contribute to local and state-wide school funds.
Credit CCO Public Domain

The state Senate Revenue Committee passed two bills that take different approaches to transitioning to a monthly ad valorem tax for the mining industry.

For years, the legislature has discussed how to address the county's version of severance taxes. Unlike severance taxes though, companies have 18 months from production to when taxes on the production is paid.

"When you consider the fact that [severance] taxes are paid on a monthly basis, we're pretty much aware of when a person becomes delinquent because in two and a half months we'll know," said Dan Noble, director of the Wyoming Department of Revenue. That's unlike ad valorem payments where delinquencies could be missed until a company no longer exists.

The lag has resulted in every county in the state missing out on some tax revenue with mineral-rich counties missing out on in the tens of millions, according to the Wyoming County Commissioners Association.

During the last legislative session, lawmakers passed a bill approving the shift to a monthly ad valorem tax collection system. The move, though, has yet to be codified.

All stakeholders giving testimony agreed that both bills should be advanced, even though each had their preference between the two.

"I see Senate File 45 as the failstop. We can live with it, but [Senate File] 60 would be preferred if we can work out a few of the kinks," said Barry Crago, Deputy County Attorney in Johnson County.

County interests said SF60 was simpler and would be easier to administer. The bill contemplates quickly moving ad valorem taxes to the same schedule as severance taxes. This bill, though, would leave a period where counties would be left with a revenue shortfall. Both counties and mineral interests preferred this approach.

SF45, on the other hand, would slowly phase the mineral industry towards a monthly schedule. The state Department of Revenue worried about the administrative costs of this approach.

While all stakeholders sought to move the bills forward, they also raised concerns. For the minerals industry, concern centered around when implementation would begin with concern that doing it too quickly would hamstring struggling operators.

"If there is an attempt to move up the date on the back payments, that really is a non-starter for industry. That's when we move away from the table. We've been at the table, we've tried to be accommodating," said Jody Levin, a lobbyist for a handful of interests including trona firms.

Committee chairman Cale Case said changing the implementation date backward or forward is a non-starter this late in the game.

"I don't want it to be jammed down anybody's throat. This is a huge important change. We're doing some of the work. Let's decide together what might be the best way to go forward," he said.

After much discussion, committee members alongside interested parties hammered out amendments to be adopted for both SF45 and SF60. For the SF45, the committee ensured that the Department of Revenue would be able to discuss appropriations to handle the additional administrative costs.

In SF60, amendments included one that decides how a loan system would work in order to cushion counties from the impact of a brief revenue shortfall.

Case said he plans to convene a workshop next week ahead of the legislative session to iron out last details before the bills move to the House Revenue Committee.