Wyoming’s Budget Crisis Tied to Downturn in Fossil Fuel Extraction

The Powder River Basin Resource Council says the state is too tied to the fossil-fuel and mineral industry and needs to diversify to improve the economy and local governments' financial picture.

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As Wyoming faces a statewide budget crisis caused by declining tax revenue from fossil fuel and mineral extraction, a group of rural citizens is calling for reforms to state and local government tax collection and financing systems.

“Our entire state is suffering following the most recent bust,” said Joyce Evans, chair of Powder River Basin Resource Council. “ Several counties have had to cut back on personnel and services, and some have been dealing with school closures,”

The group has criticized Wyoming’s dependence on royalties from fossil fuel and mineral extraction for tax revenue. When the price of fossil fuel and mineral drops, struggling or bankrupt companies can fail to pay the taxes they owe.

“We can’t afford to continue to allow money rightfully owed to counties to go uncollected,” Evans said. “Simple policy changes are needed to ensure that we can continue to provide services and can maintain our high educational standards.”

The Powder River Basin Resource Council released its report, “Tax Delinquencies and Budget Deficits: A Case for Reform,” earlier this year. The study says mineral extraction companies owe Wyoming taxpayers over $42 million in unpaid county taxes throughout the state.

The report says:

Minerals are commodities with global markets, and prices of oil, gas and coal are dictated by outside forces. Busts can come on very suddenly, leaving little time for Wyoming to prepare. Boom cycle spending must be reined in quickly. At the state and county level, budgets must be cut in all areas. School funds shrink rapidly. The number of offered programs may contract, schools may have to shut down and building and maintenance tasks are delayed. Bust cycles are harmful to the whole state, but research presented in this report indicates counties are particularly hard hit.

Campbell, Sheridan and Natrona counties in North-Central Wyoming account for nearly $39 million of the total uncollected amounts. The 2015 bankruptcy of energy company Alpha Natural Resources and its subsidiary Alpha Coal West accounted for $12 million in Campbell County alone.

“The coal industry is in continuing decline as its markets slowly shrink,” said Bob LeResche of Clearmont, the group’s co-chair.

Coal production peaked in 2008 in the Powder River Basin and across the country, according to LeResche. Fossil-fuel based electricity production is being replaced by cheaper natural gas and renewable energy, such as wind and solar. The coal industry has recently emerged from a wave of financial collapse and layoffs, with bankruptcy filings in 2015 and 2016 by the country’s three largest companies, Peabody Energy, Arch Coal, and Alpha Natural Resources.

The declining market also means the state needs to pay more attention to enforcing mine reclamation laws. “We must have full reclamation at every mine as the industry contracts,” LeResche said. “This will extend jobs in the industry and restore mined land and water resources for use after strip-mining is gone.”

The group is supporting the development of local food and farming efforts throughout the state. Members are engaged in policy efforts to support family-scale ranching by decreasing the market power of large meatpackers and agribusiness companies. The organization also trains farmers and ranchers in conservation practices. (They support full implementation of the GIPSA rules canceled by the Trump administration in 2017.)

Powder River’s members “are a profile of Wyomingites who care,” LeResche has written. He says the group has a diverse membership:

Ranchers, family farmers, county council members, veterinarians, coal mine truck drivers, PhD’s, journalists, outfitters, business owners, deans of large universities, engineers, elected state office holders, investment bankers, cabinet officers, students, photographers, state regulators, airline employees, business executives, school board members, entrepreneurs, lawyers, college instructors and professors, teachers, mothers, fathers, grandparents and hundreds of other ordinary citizens from all walks of life.

Many members are also active in efforts to support conservation-based management of public lands. The group participates in the Fortification Creek Resource Management Plan process, monitoring the impact of mining and fossil fuel production in the region’s sensitive ecology.

The group’s efforts will face real tests in 2018. Their recommendations for fixing Wyoming’s state and local tax system have been proposed before, failing to pass the state Legislature in 2016 and 2017.

That makes it all the more important to pass legislation this year, according to the report.

“There may not be many booms left for Wyoming, and we need to ensure that citizens benefit from minerals that, once severed, will never be replenished,” the report says.

 

 

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