Wednesday, February 28, 2018

Coal slump puts Wyoming in budget crisis; citizens' group offers fixes for collecting taxes on mineral extraction

"As Wyoming faces a statewide budget crisis caused by declining tax revenue from fossil fuel and mineral extraction, a group of rural citizens is calling for reforms to state and local government tax collection and financing systems," Bryce Oates reports for The Daily Yonder.

Wyoming gets more than 70 percent of its total revenue from taxes on mineral extraction (such as coal, oil and gas), but extraction companies owe over $42 million in unpaid county taxes throughout the state, according to a recent report from the Powder River Basin Resource Council. Many are bankrupt or otherwise defunct, so collecting will be difficult.

Though the basin is the nation's most productive coalfield, production peaked in 2008. And as coal jobs melted away, so did some of the state's tax base: Wyoming lost a higher percentage of its population than any other state in 2017.

The report lays out four suggestions to help fix state and local tax systems hurt by the coal bust:
  • Counties should collect mineral taxes monthly instead of yearly;
  • Counties should file liens for mineral taxes, making them a higher priority for collections if a company goes bankrupt;
  • Establish a state fund to help counties hire specialized legal counsel during bankruptcy proceedings;
  • Pass a law allowing regulators to check the status of a company's tax debt in Wyoming before allowing sale or transfer of assets. 
"There may not be many booms left for Wyoming, and we need to ensure that citizens benefit from minerals that, once severed, will never be replenished,” the report says. PRBRC's previous recommendations for fixing state and local tax systems failed to pass the state legislature in 2016 and 2017.

The group also recommends that the state better enforce mine-reclamation laws to restore the environment and extend mining-industry jobs, as well as diversify the state's economy so it won't be as dependent on mineral extraction.

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