Concern and skepticism

Senate File 60 and the collection of ad valorem taxes were, again, heavily discussed by the Board of Carbon County Commissioners (BOCCC) during their July 6 meeting. 

A continuation of concerns and frustrations expressed by Carbon County Treasurer Patty Bentsen in May and June, the discussion was primarily led by Jeremiah Reinman, executive director of the Wyoming County Commissioners Association (WCCA). The root of the concerns for the county commissioners and treasurer appears to be the transparency, or lack thereof, from the Wyoming Department of Revenue.

In 2019, following the closure of several coal mines in northern Wyoming, companies operating those mines declared bankruptcy and not only left the state, but left owing thousands in ad valorem taxes on mineral extraction. With payments of those taxes taking place on a biannual basis, Senate File 60—and House Bill 159 before it—was introduced with the intention of ensuring counties were paid the monies owed for mineral production by forcing monthly payments.

“This is something that’s very similar to what happened in the ‘80s when the State (of Wyoming) went from collecting severance taxes a year after production and forced everything forward and collects monthly, which is what we’re attempting to mirror here,” said Reiman. “It’s the very reason that we’re having the (Wyoming) Department of Revenue collect this money rather than counties because the companies are already making a monthly payment to the department of revenue.”

The difference between what occurred in the ‘80s and what was taking place now, according to Reiman, was how the switch was being implemented. More than 30 years ago, companies were “off the hook” for severance tax payments then as a way to transfer to the monthly payments. In the present, those payments are not being forgiven and the previous 18 months of production must be paid by the company; the second half of 2020 and the entirety of 2021.

Those payments will be made over the course of 13 years with eight percent of payments made in the first 12 years and four percent made in the final year. If a company, however, wants to pay out the tax earlier, they would be able to.

“This is really where the treasurers have gotten really frustrated with the Department of Revenue, and rightfully so,” Reiman said. “Initially, when we started the conversation—the assessors, the treasurers, my office—with the Department of Revenue, the Department of Revenue said ‘We’re going to collect this money for you on a monthly basis but we’re just going to send you a check. Good luck finding out who you need to submit that money to in terms of each tax district’.”

While, according to Reiman, this wouldn’t be an issue for an entity like Campbell County as it had only one taxing district, it could create an issue for counties with multiple taxing districts. Carbon County, for example, has 13 special districts—including the recently formed Saratoga-Ryan Park Museum District—which collect mill levies.

“It wasn’t an acceptable response from the Department of Revenue, and so we were sort of forcing conversation with them and showing a lot of frustration with both legislative leadership and the Governor’s Office over it,” said Reiman. “What I understand is that the department of revenue has come forward with a new process by which they will assess the companies based on the previous year’s gross products report. They’ll then assess against the mills that you’ve set for each one of your tax districts, the company will make that payment, then they’ll send that to the treasurer’s office—the information and the payment—and you’ll be able to distribute from there.”

According to Reiman, while the Wyoming Department of Revenue will be collecting and making payments of the ad valorem mineral tax revenue it will be up to the county treasurers to “true up” after each calendar year. While this, ideally, is supposed to happen in December of each year, Reiman stated it would likely happen in February of the following year after the release of a company’s gross products report.

“You’re going to want that information, in all likelihood, in order to make some decisions about whether an additional tax is due because you increased the mill levy or perhaps you’ve decreased it or whatever else might have happened or production wasn’t what was estimated by the companies when they were making those monthly payments,” Reiman said.

Under House Bill 159, a provision was created to allow companies to “opt out” of the monthly payment process and continue making payments on a biannual basis. The provision, found under Wyoming State Statute 39-13-113(f), is only applicable to companies which were involved in mineral extraction before March 24, 2020. 

Any companies which began producing after that date are required to make monthly payments. Additionally, any companies which acquired production from another company would be unable to opt out of the monthly payments. For those companies which were involved in production before March 24, 2020, the county would need to establish uniform eligibility criteria and a uniform application process.

Sublette County, said Reiman, had already undergone this process as Jonah Energy had indicated it wanted to opt out of the monthly payments. According to Reiman, Sublette County’s application included several provisions. If a company were to miss a payment on the old schedule, it would immediately be expected to begin paying monthly, if a company were to declare bankruptcy they would be required to pay the entirety of the tax and the county would have the ability to place a lien on the asset.

Another issue which had previously been raised by both the commissioners and Bentsen was the ability for counties to take out loans either for themselves or on behalf of special districts. Under Senate File 60, up to $16 million had been allocated to be loaned to counties as the process from biannual to monthly payments began. 

A question raised by Bentsen in June was who would repay the loan if a company were to declare bankruptcy before the 13 years had concluded. At the July 6 meeting, she said it was her understanding the county would be liable to repay the loan should the company declare bankruptcy.

“You have 13 years to pay this back, you’re getting an additional 18 months of ad valorem and that should be more than sufficient to pay back the three months the loan is intended to cover and we’ll work out getting additional money into the system to make sure you have access to adequate resources,” Reiman said. “If you were a one company county, I think that’s a real big concern. I think you’re diversified enough.”

While it appeared Reiman had answered a number of questions which had been posed by both the BOCCC and the other elected officials, the underlying concern about the lack of transparency from the Wyoming Department of Revenue remained. Chairman John Johnson explained to Reiman that, following a workshop with representatives of Rocky Mountain Power, the county learned they should have received more in tax revenues paid by wind energy companies then they had been paid. According to Johnson, when the county asked about the tax revenues, the department of revenue informed them it wasn’t public information.

“To me, it’s like a little miniature Alcatraz. Everything goes in but nothing out. It shouldn’t be that complicated,” said Johnson. “That’s where our skepticism lies.”

Said Carbon County Attorney Ashley Mayfield-Davis “The intent behind fixing this issue is well understood by our board and by our county. That’s not the problem but the repayment and the department of the revenue and their lack of transparency are issues.”

The Board of Carbon County Commissioners will have met on July 19. The next meeting of the Board of Carbon County Commissioners will be at 9 a.m. on August 3 at the Carbon County Courthouse in Rawlins.