CHEYENNE — A bill that could change the tax structure of mineral industries across Wyoming and potentially give a boost to school districts statewide passed second reading today in the House of Representatives.

House Bill 159 bill seeks to require oil and gas, coal, and trona companies to pay a monthly ad valorem tax on the gross output of mineral production. Currently companies pay a semi-annual tax, and the transition could generate almost a billion dollars in revenue over the next decade, according to House District 48 Representative Clark Stith.

Stith posted on social media last night that the measure could mean good news for school districts and local governments statewide if enacted.

Stith said that if enacted, HB159 “should take some pressure off the need to raise taxes to fund schools.” He also said it will give a shot in the arm to county and municipal governments statewide, who should get about $270 million of extra revenue over ten years. 

HB159 would raise about $900 million over a period of ten years by requiring the mineral companies to get caught up on their ad valorem tax, which they currently pay 18 months in arrears, Stith said.

“Seventy percent of that amount goes to K-12 schools, so it comes out to about $630 million, or $63 million per year over ten years extra to K-12 schools,” he added. “As a mineral intensive county, Sweetwater County local governments should get a substantial portion of that.”

The remaining $270 million generated by HB159 will go to counties, cities and towns. 

Education Funding

Stith said that K-12 funding is currently running about $100 million per year in the red, so the legislature will spend about $200 million out of the rainy day account in the current two-year budget to fund schools.

“The net effect for schools, then, is to turn an annual $100 million deficit into about a $37 million annual average deficit in school funding for the next ten years,” Stith said. “It doesn’t completely solve the problem, but it helps.”

One concern is that the measure might crowd out investment or even push some cash-strapped natural gas producers or coal companies into bankruptcy.

But Stith said HB 159 has a safeguard option built in so that if a company cannot pay the extra tax, it could negotiate an agreement with the respective county governments on a payment plan. 

“Local governments will likely feel the positive impact of the additional revenue more than local school districts, whose revenue streams are currently guaranteed by the School Foundation Program guarantee,” he said.

If enacted, the law would go into effect January 1, 2021.