Bill tackles delinquent ad valorem payments

CHEYENNE – Counties seeking delinquent ad valorem taxes from bankrupt energy companies will automatically move to the front of the line of creditors seeking payment starting in 2021.

This general session, the Wyoming Legislature passed Senate File 118, which gives primacy to counties seeking delinquent tax payments from bankrupt energy companies. The new system starts in 2021.

Currently, counties can file a claim for first payment but must compete against banks and other lenders for a chance to recapture some of the money owed.

The bill’s sponsor, Sen. Ogden Driskill, R-Devil’s Tower, said the inability to collect even a portion of the money owed to counties has major ramifications for many in the state, including Campbell County in his district.

Driskill said SF -118 will now make the system for delinquent ad valorem taxes, which are paid on the county level by companies on the value of extracted minerals, the same as owed property taxes. In those cases, counties have supremacy for any money made off a foreclosure sale.

“This is exceptionally important for the counties and the schools,” Driskill said. “It’s really crippling to them to have booked income and not have it show up. [The issue] is big, and it’s getting bigger.”

A 2018 study from the Powder River Basin Resource Council showed counties across Wyoming were owned more than $55 million total in delinquent ad valorem taxes over a ten-year period. Campbell topped that list with almost $33 million owed to the county.

While the bill will give county governments the first place in line for bankruptcy payments, it’s unlikely that proceeding will help pay the entire debt that is owed.

“There’s no certainty in this bill that the counties will get all money owed,” said Jerimiah Rieman, executive director of the Wyoming County Commissioners Association. “It will give them higher priority if a company goes into bankruptcy. But [this bill] is not the end all be all.”

Part of the problem stems from the lag time between a mineral being extracted and the due date on ad valorem taxes. While companies make monthly severance tax payments to the state, they have up to 18 months to pay ad valorem taxes to the counties the activity occurred in. And in the interim, a variety of issues, including a company going bankrupt or a mine changing hands, can keep a county from seeing the money it’s due.

The solution for keeping counties from having to track down its money is to require companies to pay those taxes on a monthly basis, just like they do to the state, said Hesid Brandow, a community organizer who conducted the study for the Powder River Basin Resource Council.

“The real solution is monthly collections, and that need hasn’t gone away or diminished,” Brandow said. “That need only continues to increase, and the longer we ignore it, the bigger the problem it’s going to be.”

Driskill and Rieman agreed that changing the payment system to prevent an 18-month lag time is the major fix that needs to be considered to help solve the problem permanently.

“This won’t fix it, but it will stop it from occurring over again and again,” Driskill said.