GILLETTE — Campbell County spent more than a million dollars in the last year as it tried to collect unpaid mineral production taxes. Thanks to a new state law, it won’t have to bear the full cost of that.
From Aug. 1, 2018, to Oct. 21, 2019, Campbell County spent $1,354,987 in legal fees in five bankruptcy cases in four states for taxes owed from 2015 through 2019.
In 2018, state legislators passed House Bill 72, which allows counties to deduct “extraordinary costs to collect taxes” before the tax is distributed. It made it through both houses without a single “no” vote.
On Tuesday, the law was used for the first time when commissioners approved a certification of extraordinary cost in the collection of ad valorem taxes.
Between August 2018 and October 2019, the county fought to collect taxes in the bankruptcies of Vanguard Natural Resources, Alpha Natural Resources, Blackjewel and Cloud Peak Energy.
Because the bankruptcies were filed out of state, the county had to hire special counsel to fight for them in those bankruptcy courts.
The Alpha case is “largely resolved” at this point, said County Administrative Director Carol Seeger. But the others are still ongoing.
The county spent $855,086 on two bankruptcy cases with Vanguard, an oil and gas firm that is trying to recoup $5.2 million in taxes that it already has paid. Campbell County is one of seven Wyoming counties involved in the lawsuit.
It also spent $181,663 in the Cloud Peak bankruptcy and $309,496 in the Blackjewel bankruptcy during that 14-month time span.
In the past, counties would have to absorb all of the legal fees. But now, thanks to the new law, each entity that gets some of the tax money will pay for its share of the cost so that the county doesn’t have to bear the weight of the full cost.
“We’re treading new ground,” Seeger said. “This is the first time, to my knowledge, this statute is going to be used.”
“Extraordinary costs require extraordinary measures,” said Commissioner D.G. Reardon.
The county will pay the legal fees up front. When the taxes are paid, before the county distributes it to entities like the hospital, cemetery and school districts, it will withhold some money from each entity, according to the percentage of the mill levy that it receives.
For example, the Campbell County School District receives about 73% of the mill levy, meaning that if the county were distributing $10 million in taxes, the school district would receive $7.3 million of that.
With this new law, 73% of the county’s legal fees, or $989,140, would be withheld from the money distributed to the school district.
The money that’s deducted will be put into the county’s general fund in an account to offset legal fees.
The entities will be getting less money, but Commission Chairman Rusty Bell said that if it weren’t for the county fighting in bankruptcy courts to collect it, there might not be any money to distribute.
And although the legal costs might be extraordinary, they pale in comparison with the amount of unpaid taxes that the county is working to collect.
The county recently collected $13.5 million from Contura Energy, and it’s gotten a few million dollars in other cases, Bell said.
“I’m darn glad we had this (law) available to us,” he said.