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Planet-Profit Report, reporting on sustainable development in the Western United States.

Coal tax could cost Wyoming millions

Legislature looks at giving miners a break

By Jeremy Fugleberg, Casper Star-Tribune

As Wyoming coal producers spend more money to chase Powder River Basin coal seams that slant into the earth, their state severance tax rate climbs.

State legislators are taking a look at breaking that connection, a move lauded by the mining companies but one that will likely cost the state millions of dollars in lost revenue over the coming years.

As the companies follow the coal seams further west, the seams head deeper underground.That means the companies need to spend more more money to strip away the ground above the coal, also known as overburden, to get to the seams.

Under the current formula used by the state to calculate the severance tax, rising mining costs, such as the purchase of a new conveyor system, boost the taxable value of the companies’ work. So companies have found themselves paying a higher tax rate each year, just for pushing further into the basin’s coal seams.

“It’s kind of counterintuitive,” said Craig Grenvik, administrator of the Wyoming Revenue Department’s Mineral Tax Division.

On Friday, members of the Legislature’s Joint Revenue Committee will meet in Worland and consider proposed legislation that will essentially cap the severance tax rate and remove the rising mining costs from the tax rate formula.

Marion Loomis, executive director of the Wyoming Mining Association, which represents the state’s coal industry, applauded the proposed legislation.

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