Forecast sees hike in Wyoming oil taxes, drop in coal taxes
CHEYENNE, Wyo. (AP) — Increasing oil patch activity in Wyoming will generate more tax revenue for the state’s depleted coffers, but the predicted bump in oil tax revenue isn’t near enough to counter the current and expected continued decline in coal and natural gas revenue.
“We still got a long way to go to cover our deficit,” Rep. Bob Nicholas, co-chairman of the Legislature’s Joint Appropriations Committee, said Monday after hearing the latest projections of state revenue.
The Wyoming Legislature meets next month to craft a new state budget while facing a huge revenue shortfall brought on by the downturn in the state’s mainstay fossil fuels industry. Wyoming’s public K-12 education system alone faces a more than $400 million deficit over the next two years.
The state’s budget picture isn’t as bleak as it was earlier this year thanks to new signs of life, or at least a bottoming out, of the state’s energy industry. Over the last few years, Wyoming has lost thousands of oil, natural gas and coal jobs. The state saw its revenue in mineral extraction taxes plummet by nearly 20 percent from four years ago.
The latest revenue projections released by the state’s Consensus Revenue Estimating Group predict the state will see increased oil production of about 4 million barrels, which will result in oil severance tax revenue increasing from $161 million in Fiscal Year 2017 to about $193.7 million in FY 2018.
“The one area of modest optimism is in oil production,” Don Richards, co-chairman of the revenue estimating panel, said.
However, the panel doesn’t predict a similar turnaround for natural gas and coal.
Wyoming is the nation’s top coal-producing state and the industry has been a reliable source of income for the state for decades.
Coal severance taxes collected by the state are predicted to fall from $218 million in FY 2017 to $207.4 million in FY 2018. It is expected to fall below $200 million over the following four years, hitting $190.8 million in 2022.
The last time the state collected less than $200 million in coal severance taxes was in 2006 when it brought in $183 million.
In 2011, coal severance taxes peaked at $294 million.
Natural gas severance tax collections also are expected to continue declining, from $179.4 million in 2017 to $171.4 million in 2018 and then down to about $165 million in 2022.
The numbers mean Wyoming lawmakers will still have difficult decisions on how to fund government programs and services such as how quickly it should spend money from a rainy-day fund and whether new sources of revenue are needed.
“It’s going to be a very, interesting and thought-provoking session when we get down to try to figure out how we balance our budgets and pay for our education and pay for ongoing government,” Nicholas said.