Senate Transforms, Advances Monthly Ad Valorem Bill

Mar 6, 2020

A few of the changes in an amendment adopted by the Senate
Credit Legislative Service Office

An amended bill to move ad valorem tax payments from an 18-month to a monthly schedule has passed its first hurdle on the Senate floor.

Ad valorem taxes are a property tax paid to counties from mineral companies. Wyoming is currently missing out on about $130 million in delinquent ad valorem taxes, according to the Wyoming County Commissioners Association. 

Lawmakers and county commissioners see a faster collection schedule as a solution to recouping those missing funds. The bill has gone through different iterations from the interim, to the House, and now in the Senate.

"I want everyone to first of all realize that this is one of the most important pieces of legislation that we have in this session," said Laramie Sen. Chris Rothfuss. "Think of this as a billion-dollar discussion that we're having."

HB 159 - Monthly Payment of Ad Valorem Tax On Mineral Production - entered the Senate Revenue Committee with several House amendments that would require simultaneous payment under two tax schemes. It also sought to have the state hold taxes for some time along with incentive plans for energy companies.

The Senate passed an amendment that moves sharply away from that approach.

"This is the compromise. It's a better piece of work than [what] came to us in the Senate," said Lander Sen. Cale Case.

Case spearheaded the amendment in the Senate Revenue Committee to transition to a monthly tax collection under the current tax scheme. It would have companies pay the same amount per year, but through smaller increments every month.

In 2023, once companies are used to the monthly system, they would start paying more to reduce that 18-month lag. By 2027, companies are expected to be caught up with only one year of lag time instead of 18 months. The legislature could then reassess the situation.

"It's not perfect by any stretch of the imagination," said Senate President Drew Perkins. "But I think it has a couple things. One, it removes all that stuff, the state holding it and investing it… at the other end of the day, it starts it this year. We start moving towards this designation of monthly payments."

Sen. Rothfuss said he doesn't like the House or Senate version of this bill, but that the Senate version starts down a rational path without committing to bad choices.

The amendment was successful.

Cheyenne Sen. Affie Ellis did not support the change, saying the rate of delinquency is incredibly low and that the state is rushing into a switch to a monthly schedule.

"If we don't get this right, we're doing harm to the very industries and people that we're trying to support, that support us. So why not take our time?" she asked

Perkins agreed that this is a delicate issue but supported the amended bill.

"There's a lot of pressure on these companies right now. You have to be very, very delicate as you exact taxes out of these folks that we don't end up driving them out of business," he said.

"They certainly employ a lot of families and people around the state whose children attend the schools that these taxes collect. They're our friends and neighbors and I'm very reluctant to do things at this precarious time simply increase their risk of failure."

The amended version of the bill passed through the Senate and will go on to second reading next week.

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