SHERIDAN — A bill proposal that would ease the financial burden on Wyoming counties looks like it will become law next month. The bill proposes that counties should not be liable for unpaid taxes from a delinquent ad valorem taxpayer because counties represent other affected parties, such as special districts and education.
Nearly all delinquent ad valorem taxpayers are mineral companies, some of which declare bankruptcy and leave town without paying taxes, which is made easier because of the lengthy delay on the county payment schedule. Furthermore, most counties don’t have the financial resources to attempt to get the unpaid taxes back through the legal process.
Rep. Eric Barlow, R-Gillette, who proposed similar bills related to ad valorem taxes that failed in both 2016 and 2017, is the main sponsor for the current bill.
The house committee of the whole unanimously passed the bill for introduction Feb. 13 and referred it to the revenue committee. The revenue committee made two amendments. The first amendment made the proposal — assuming it passes — effective immediately, likely meaning sometime in mid-March, instead of July 1.
Rep. Mike Madden, R-Buffalo, chairman of the house revenue committee, said the committee moved the effective date forward because there are some court cases involving back taxes owed to counties in Wyoming. In order to have a better chance at winning the cases, Madden said, the counties need to complete work prior to July 1.
The other amendment changed language to better determine the definition of extraordinary expenses. The revenue committee included out of county court costs, because many companies are headquartered in different counties or states than where they operate.
Some mineral companies are headquartered in Maryland, for example. If the local Wyoming county attempts to get the delinquent taxes back, it would have to hire lawyers from outside the state to undertake the case, a potentially time-consuming, expensive process.
“It really wouldn’t be fair for the county … to pay for that,” Rep. Mark Kinner, R-Sheridan, said. “So the whole point of that bill was that if monies are collected, that part of it goes to schools, part of that goes to colleges, part of that goes to the state.”
In other words, all the entities that would benefit from the tax would pay a percentage of the collection costs.
Once the revenue committee made the amendments, it unanimously approved the bill to be sent to the House. The proposal passed on second reading Feb. 16 and unanimously passed on third reading Feb. 19.
“It was one of those rare deals where everybody agreed there was a problem,” Madden said. “I would think it would make counties be more aggressive when it comes to trying to collect taxes, which is something that’s in our interest.”
Now the bill will go through the Senate, where the Senate revenue committee will consider the bill Tuesday. If the committee approves of the proposal, it will send the bill to the Senate for second and third readings. If the bill passes third reading in the Senate, it will go to the Governor’s office for final approval.
Sheridan County accrued more than $7 million in delinquent taxes from 2006-16. Sheridan County Commission chairman Steve Maier said the county commissioners supported the proposal, though it wouldn’t immediately affect the county.
“We don’t have the funds to hire a major law firm to do that,” Maier said. “Sheridan County’s really not in the position to spend a half-million dollars in hopes of getting some of that back. That’s my read on it.”
The proposal could affect Sheridan County in the future if the county tries to fight back through the legal process.
For now, the proposal would affect a few counties like Campbell and Sublette that are willing to spend six figures in legal fees to go after delinquent mineral taxpayers. Sublette County filed a claim against Vanguard Natural Resources, LLC, on Dec. 21, 2017, for $8.3 million dollars for nonpayment of ad valorem taxes on production, while Campbell County accumulated over $26 million in unpaid taxes from 2006-16.
Delinquent taxes affect other aspects of Wyoming life.
Around 75 percent of mineral taxes are redistributed from counties to a state fund and given out to school districts across the state, which are likely facing budget cuts from the current legislative session.
The ad valorem tax proposal may not solve anything right away but could contribute to easing the burden on counties while also putting money back into the state’s education system.