Coal trains roll through Bill, Wyoming, passing an oil well. Lawmakers have given initial approval to legislation that would require monthly ad valorem tax payments from mineral producers, instead of the twice yearly system that allows companies to hold and invest the money. (Flickr Creative Commons/Aaron Hockley)

Lawmakers want to rewrite a law that has allowed energy companies to earn millions of dollars by holding and investing tax revenue owed to the state, while school districts and counties often borrow in anticipation of payment.

A legislative committee last month voted to sponsor a bill that would require mineral companies to pay state ad valorem property taxes on a monthly basis instead of twice yearly. Proponents say it would help smooth out cash flow for school districts and counties, which sometimes borrow money or run short on cash as they wait for the mineral tax revenue to come in.

The current ad valorem tax schedule, which has been in place for decades, allows mineral companies to pay property taxes in two lump sums each year. For example, ad valorem taxes calculated for the 2014 calendar year are due Nov. 10, 2015, and May 10, 2016.

In some cases, property taxes on a ton of coal mined on Jan. 1, 2014, might not be paid for a full 22 months. That time lag allows oil, gas, and coal companies to hold onto that money for a full year or more, during which they can invest the money as they see fit — potentially earning tens of millions over time.

Former energy lobbyist Larry Wolfe, a proponent of the bill, estimated coal companies could be making upwards of $3.8 million each year because of the lag in tax collections, and oil and gas could be earning even more.

Meanwhile, the School Foundation Program routinely takes out short-term loans in August to pay for school district operations around the state as the fall semester begins.

At its Nov. 20 meeting in Cheyenne, the Joint Interim Revenue Committee approved a draft bill to adopt the monthly ad valorem tax payment schedule on vote of 8 in favor and 5 opposed. As currently written, the bill would go into effect in 2019. However, the bill faces opposition — particularly from the coal industry, which often has a receptive ear in Cheyenne.

The bill was first developed and approved by the Task Force on Mineral Taxes. Lawmakers on the task force voting for the measure included Sen. Michael Von Flatern (R-Gillette), Rep. Michael Madden (R-Buffalo), and Rep. Tom Reeder (R-Casper). Sen. Ray Peterson (R-Cowley) opposed the bill, along with former coal industry lobbyist Marion Loomis, the only citizen member of the task force to oppose the bill.

Oil and gas split from coal

Several oil and gas companies support the measure, primarily because it would simplify the valuation of minerals and the administrative work that comes with paying taxes on thousands of wells scattered across the state.

The Wyoming Mining Association, which represents coal, trona and other solid mineral interests, opposed the bill. The association has concerns about the schedule for phasing in the new monthly payment system.

“The system on how we are taxing solid minerals is not broken,” said Jonathan Downing, director of the Wyoming Mining Association. “Let’s keep it simple, and keep it the way it’s been.”

Downing said a group of mining companies will meet this week to review the draft bill to decide whether they will continue to oppose the measure.

Former energy lobbyist helped draft the bill

One of the chief proponents of the bill is Larry Wolfe, a Task Force on Mineral Taxes member and former energy industry lobbyist with Holland & Hart in Cheyenne. For him, the bill is about looking for efficiency in tax collection, particularly at a time when the state is facing a revenue crunch. The state has already moved severance tax collection to a monthly schedule, and moving ad valorem taxes to the same schedule will streamline the process.

“If people are really concerned about the budget, one thing you should do is pass a bill like this,” Wolfe said. “Every single month there is going to be money flowing into counties’ coffers, whereas before you were as much as 22 months behind, and at least 10 months behind. It’s no more complicated than that.”

In his view, Wyoming’s tax system has for decades given the “time value of money” to mineral companies, who can make a return on money while waiting for tax deadlines.

“There is this very fundamental notion that money today is worth more than money a year from now,” Wolfe said. “Why have we decided to have a system in place for 30 to 40 years that basically deprives the county of the value of that money for a very long period of time?”

Just how much money is at stake is unclear, Wolfe said. Judging internal rates of return on company investments is difficult and relies on many assumptions. But the bill would take that investment opportunity away for mineral producers.

“I’ve gotten no death threats yet,” said Wolfe of his support of the bill. “If I am going to do what I promised to do when the governor appointed me, to listen to everyone’s views and try to do things that make a difference, I can’t worry about whose individual ox is being gored.”

Click here to see a preliminary bill draft that the Revenue Committee debated on Nov. 20.

Flickr Creative Commons photo by Aaron Hockley.

Gregory Nickerson worked as government and policy reporter for WyoFile from 2012-2015. He studied history at the University of Wyoming. Follow Greg on Twitter at @GregNickersonWY and on

Join the Conversation


Want to join the discussion? Fantastic, here are the ground rules: * Provide your full name — no pseudonyms. WyoFile stands behind everything we publish and expects commenters to do the same. * No personal attacks, profanity, discriminatory language or threats. Keep it clean, civil and on topic. *WyoFile does not fact check every comment but, when noticed, submissions containing clear misinformation, demonstrably false statements of fact or links to sites trafficking in such will not be posted. *Individual commenters are limited to three comments per story, including replies.

Your email address will not be published. Required fields are marked *

  1. Production happens every month,(from wells) thus severance taxes on production(that produces every month)
    It is curious how many suits on taxes and opposition to royalty collections have been lodged by Holland and Hart. A typical Holland and Hart Lawyer has market (I -net) buzz such as:
    one who engages in
    effective representation of clients in the energy and public land use sectors in litigation, regulatory compliance, and legislative and administrative advocacy.
    & represents energy and natural resources clients in federal court litigation and appeals to federal and state administrative boards, & also helps clients navigate the federal and state permitting and regulatory processes in order to develop their projects on, or across, public lands, & represented coal, oil and gas, trona, and other mining interests in a wide variety of court challenges.

    Why for the last 40 years, Holland and Hart has been excited to have a system in place that makes sure its bread is buttered by large oil companies. Also, see on the RIK Scam , which was a federal matter, but evolved out of the lil WYO clique, that impacted the Nation far beyond Wyoming. Surely, Wyofile must have the means to see the law suits in which Holland and Hart was involved in challenging the collection of monies on federal lands, as to federal interests. It is truly astounding, over the course of the last 40 years.
    After all, Exxon, and Eacana are mere leasees, not the land owner of federal lands. the valuation of minerals on federal lands is determined by the Federal Government–not the state. are some after the RIK scams having no recall on matters. Is it time to bring up from the archives that debacle, that had deep roots in Wyoming. Granted the State of Wyoming can tax, on production taxes, and ad valorem taxes, but it does not determine the value of production on federal lands. See on the prior problems created by the Bar club in WYO, that short changed the Nation(the USA). History if you will, all in the Law Libraries from the Gulf, to Alaska, to California, to DOJ MAIN.

    Jim Hagood

  2. Obviously, an ad valorem tax is not a
    Production tax, or a severance tax.
    Is Wyoming now feeling a big pinch
    given the lower prices of oil, natural
    gas, & coal?
    Its Chamber Promoters portray Wyoming
    as an on -shore tax ( avoidance) haven,
    for non- oil & natural gas companies.
    God, forbid that Wyoming would
    have a state income tax, or a higher
    property tax for public schools.
    Don’t forget Paul Allen, the
    Microsoft guru is funding his
    war on coal, law suit to sue the Dept
    of Interior( BLM) over coal leasing, and his front group
    is the outfit of that Wyo Rancher,
    Ex Commicioner of Natural
    Resources in Alaska.

    Jim Hagood

  3. I think we can mostly agree that the current annual tax regimen is too advantageous to industry and burden to the State. I disagree with Mining Association director now lobbyist Loomis that the system is running fine. He’s semi-right when he says it’s not really broken , but it’s not really running smoothly at road speed either. More of a slog or crawl. We’ve seen that changes or even upheavals in the minerals industry can happen with alarming rapidity, yet the State must have the patience of Job to recieve its tax haul. That is an unacceptable disparity, subject to externalities.

    So I have to ask both sides here if extracting those ad valorem / severance taxes on a Quarterly basis might be a more effective compromise. That would be four times faster than the current annual process, and presumably a better fit with the corporations’ quarterly business rhythm and all the other quarterly filings they are already routinely doing. Going to a monthly system seems to be a bit impatient on the State’s part. The quarterly cycle would have benefits to both industry and state without imposing any new hardships .

    I have a much larger issue with Wyoming using property / ad valorem taxes as the fundamental source of its education funding. I’ve never been entirely comfortable with that narrow model. It taxes minerals as property , but only when those minerals start moving to market. You get zero property value when they are still in the ground. Even unoccupied buildings and empty land gets taxed as property , albeit annually . Minerals move , and move quickly when they do . Only once ( and that is important to both qualify and quantify ) Thus the tax on minerals should keep better pace with the industrial process moving them..

    Dewey Vanderhoff