Governor signs bill mandating monthly production tax payments

GILLETTE — It’s official. In 2023, mineral producers must start paying their ad valorem production taxes monthly.

Earlier this month, the state Legislature passed House Bill 159, a monthly ad valorem tax bill, and on Tuesday, Gov. Mark Gordon signed it into law.

With HB 159 now law, mineral producers must pay their ad valorem taxes monthly starting Jan. 1, 2023. They also can choose to start paying monthly earlier than that deadline beginning Jan. 1, 2021, or Jan. 1, 2022.

In its infancy, HB 159 required companies to pay taxes on production from two months before. By the time it got to the governor’s desk, however, those two months turned into 12 months.

While mineral production taxes will eventually be paid on a monthly schedule, they’ll be paid on production from 12 months prior. It’s still an improvement on the 18-24 month delay that counties have been dealing with.

Campbell County Commissioner Rusty Bell called HB 159 “one of the most important pieces of legislation passed in the last few years” and a “big first step for Wyoming.”

This bill has been a long time coming for Campbell County, which had been trying to get a monthly ad valorem tax payment structure for several years, but prior to this year bills were always shot down by the Legislature. This year was different.

Bell said that in the last few months, the conversation switched from “if we were going to do monthly payments, to how we’re going to implement it.”

Everyone, from counties to the energy industry to the Legislature, agreed that a monthly payment schedule is the way to go, Bell said. The challenge was figuring out how to get there.

Another bill Gordon signed Tuesday was Senate File 139, a tax lien enforcement bill that cleans up language in state statute to “make sure things don’t fall through the cracks,” Bell said.

“The Legislature worked like it was supposed to,” he said. “It identified a problem early, set up a select committee and took a lot of testimony.”

Some work still needs to be done, however. The Legislature will continue discussions of production taxes as an interim topic this year. There will be a transition period for companies and counties as they adjust to the new structure.

“I don’t think we should say it will work perfectly fine,” Bell said, adding that HB 159 is long and complex, and time will tell if there are “any hiccups in there we need to fix.”

Bell said he hopes the monthly payment schedule will help Campbell County, and other counties around the state, to avoid situations where they miss out on millions of dollars of owed taxes.

“When you’re waiting 18-24 months on payment, the problem’s so far out there, it’s almost unfixable,” Bell said. With monthly payments, “we’ll know earlier when they’re having issues, sit down with them and work with them.”