By Marit Gookin
Lander Journal
Via- Wyoming News Exchange

LANDER — Passed in July, the “Big Beautiful Bill” was, as the name suggests, very large and dealt with a vast array of topics. One of those topics with particular relevance for Wyoming was a 44% reduction in the federal royalty rate on coal – a measure which some say will boost coal production, while others point to an anticipated loss of approximately $50 million in revenue every year for the state. 

Although its impact on state revenues is anticipated to be less dramatic, the federal royalty rate on new oil and gas production was also slashed.

“That $50 million loss exacerbates property tax reductions already disrupting the capacity of local governments to provide basic services,” columnist and former state legislator Rodger McDaniel recently wrote. “There’s never been another time when our entire congressional delegation teamed up in opposition to the state’s needs in order to further competing partisan whims … This is a fundamental failure on the part of Barrasso, Lummis, and Hageman whose job descriptions require them to protect Wyoming’s interests in Washington.”

The bill, Wyoming’s U.S. Representative Harriet Hageman recently said in her Instagram Weekday Wake-Up segment, is a good thing for Wyoming, returning mineral royalties rates to pre-COVID levels. 

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“We have one coal company in Wyoming that’s saving $15 million in just the remainder of this year. That’s money they can reinvest” into the company, its employees, and acquiring more permitting to expand operations, she said.

Sen. Tim Salazar, R-Riverton, and Rep. John Bear, R-Gillette, chairs of the Wyoming State Legislature’s Joint Appropriations Committee, wrote to members of Wyoming’s congressional delegation asking them to reconsider the cuts. 

All three of Wyoming’s representatives in Washington, D.C., ultimately voted for the bill without asking for revisions to mineral royalty reductions.

Separate from state-assessed mineral taxation, federal mineral royalties are usually split evenly between the federal government and the state. In Wyoming, they help pay for state and county roads, K-12 education, and the University of Wyoming in addition to city and county services.

Wyoming’s Senator John Barrasso argued on the U.S. Senate floor that decreasing how much companies are asked to pay in federal mineral royalties will increase production, resulting in a net gain for the state of Wyoming.

“This law empowers states to produce more energy,” Barrasso said. “It cuts red tape; it creates opportunities for our energy producers.”

Wyoming’s property tax system is written into its constitution, and consists of just three classes of property. Mineral and mine products are taxed at 100%; industrial property is taxed at 11.5%; and all other property, including residential property, is taxed at 9.5%. 

There is a slight exception in the relevant article for agricultural property, which is taxed based on production rather than market value, but two significant factors stand out: The state taxation of mineral and industrial properties are indexed to the taxation of other properties, meaning that decreases to homeowner taxes also decrease other property taxes, and changing this system would require a constitutional amendment.

However, the Wyoming Consensus Revenue Estimating Group produced a report in July that found that the cut to coal revenues alone will likely result in a loss of $50 million every year for the state of Wyoming, “depending upon production levels. This reduced revenue will be modestly offset by higher severance and ad valorem payments as companies will be able to deduct a lower amount of [federal mineral royalties]; however, this offset is small compared to the reduced FMRs.”

Compared to some other Wyoming counties, Fremont County is slightly insulated from changes to mineral taxation and revenues. 

“I don’t think any year in which we have a large portion [of the county’s valuation] as mineral is normal,” Fremont County Assessor Tara Berg explained in a prior interview; around 2016, state-assessed values (which include state-assessed mineral values) fell off sharply in Fremont County. 

Income from mineral royalties still play a role in the county’s revenue make up, but it does not make up a majority of the county’s income by any means.

This means that any expected boost to the mineral industry as a result of these cuts is unlikely to have a dramatic impact in Fremont County as things currently stand, while any statewide cuts as a result of federal mineral royalty reductions would likely be felt.