- Associated Press - Thursday, April 9, 2015

CASPER, Wyo. (AP) - A task force of lawmakers, industry representatives and others is beginning a two-year study on how to simplify taxes on coal, oil, gas and other minerals extracted in Wyoming.

Rewriting the tax code has come at the request of the minerals industry, but observers say changes must be revenue-neutral so that state and county coffers don’t decrease.

Severance taxes, assessed when a mineral is taken from the ground, and ad valorem taxes, akin to property taxes on minerals, provide a large amount of state and local revenues.

Both types of taxes will be studied by the task force, which was created by the 2015 Legislature and includes county officials.

The task force will meet at least four times this year and next year, including the first meetings held Thursday and Friday in Cheyenne.

By the end of 2016, it will submit any recommendations to the Legislature’s Joint Revenue Committee, said Rep. Mike Madden, R-Buffalo, a co-chairman of the Joint Revenue Committee and the task force.

Industry has different concerns about the current tax structure.

With oil and gas, there are questions over who is responsible to pay taxes since multiple companies may own a particular well, Madden said.

Sometimes the owner of the minerals enters into a partnership with a drilling and exploration company. Sometimes, partnerships merge or divest, he said.

“In the case of oil wells, it’s a moving target,” he told the Casper Star-Tribune (http://bit.ly/1GOTwtv).

Oil and gas producers are required to submit tax forms detailing their costs and revenue every month, but often, they submit estimates and more accurate information months later, Madden said.

Bruce Hinchey, president of the Petroleum Association of Wyoming, said he would like the state to combine the severance and ad valorem taxes.

“That would certainly cut down on audits and disagreements of where things have been in the past,” Hinchey said.

With coal, much of the discussion has revolved around how to value the mined coal.

In 2012, the Legislature rejected a bill that would have changed the way coal is valued.

Jonathan Downing, executive director of the Wyoming Mining Association, said the tax system for coal is complicated.

Jill Morrison of the Sheridan-based Powder River Basin Resource Council, a landowner advocacy group, is concerned membership of the task force is weighted toward the minerals industry.

“These are public minerals, these are a finite resource,” Morrison said. “They get one time to be taxed. I understand industry’s concern to streamline the taxation or simplify it, but we have to be sure that the public is getting a fair value from those taxes.”

Brianna Jones of the Cheyenne-based Equality State Policy Center, which works on local and state government accountability, said the organization will carefully track the process.

“It’s a great opportunity to simplify how taxes are assessed, which should be more understandable and transparent,” she said. “But all adjustments need to maintain current revenue levels.”

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Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com

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