CHEYENNE — Counties across the state are still waiting on millions of dollars in unpaid mineral production taxes, causing a cascade of underfunded governmental services.
A study by the Powder River Basin Resource Council that included 13 counties across the state found there’s more than $55 million in unpaid ad valorem taxes over the past 10 years.
Laramie County was still owed $116,882.43, Sweetwater County was owed $910,792.09, and Carbon County had $10,386,688.94 in delinquent tax payments. Only Campbell County, missing $32,740,475.11, was owed more money than Sweetwater.
Hesid Brandow, a community organizer and the author of the study, said the causes for the delinquency are varied. Energy companies go bankrupt and tax payments go unfulfilled, energy-producing properties are sold and the tax debt doesn’t transfer, or banks that have loaned money to a bankrupt energy company get first right to any money during a bankruptcy.
“Every treasurer I contacted felt like this is a dire situation,” Brandow said. “No one is happy with this, and everyone wants a solution.”
Brandow said the $55 million doesn’t take into account unpaid tax bills that have been outstanding for so long that counties have just written them off as lost.
Many of the problems center around when counties are paid their taxes verses when the state is paid. While state severance taxes are paid by energy companies on a monthly basis, counties typically have to wait an average of 18 months from the time the minerals are extracted for their payments. That time lag allows for all the issues that cause delinquent payments to manifest, Brandow said.
But no matter the reason for the lack of payment, Brandow said the result is the same — counties being faced with significant budget challenges due to money that was budgeted but couldn’t be collected.
“It has had a big impact on us,” Carbon County Treasurer Patricia Bentsen said. “It’s a lot of money that’s not being collected.”
Bentsen said the more than $10 million Carbon County never received meant cuts had to be made to schools and other services. And she doesn’t see any way for the county to ever resolve the outstanding debts.
“We had a lot of it due to (company) bankruptcy. It’s affected our smaller outlying communities and greatly affected our school districts,” Bentsen said. “We can’t give money out we have not received.”
Changing when counties collect ad valorem taxes is one solution that is being considered by the Joint Revenue Interim Committee, which is set to discuss options Sept. 21.
Along with changing the timeline for payments, lawmakers will also discuss ideas like attaching tax debts to the property and changing the priority counties have in the bankruptcy process.
Rep. Mike Madden, R-Buffalo, is chairman of the House Revenue Committee and said the interim committee would be going over every option thoroughly, including the ramifications for any change in the current policy.
Madden said each solution could lead to other challenges.
If county tax payments are synchronized with the state severance tax payments, during that first year of the change, energy companies would be paying two years worth of tax bills in a single year. If counties are given priority over lenders when a company goes bankrupt, the investment made by banks and other lenders will be negatively affected.
“I hope we can come up with some idea of a compromise that is palatable to the industry, as well as acceptable to the state. Anytime there’s compromise, both sides have to give a little bit,” Madden sad.
While the unpaid taxes are significant hits to the counties, Madden also said they represent only a small percentage when compared to the amount the state and counties collect overall. The issue becomes more pronounced, though, when the energy market changes, like it did for the coal industry in 2016, and companies close up shop with outstanding tax debt.