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October 5 & 6, 2004
Parkway Plaza Hotel
Casper, Wyoming
Senator Robert Peck, Co-Chairman
Representative Roy Cohee, Co-Chairman
Senator Dick Erb
Senator Rae Lynn Job (October 5)
Senator Jayne Mockler (October 5)
Representative Rodney “Pete” Anderson
Representative Pat Childers
Representative Lorna Johnson
Representative Tom Lockhart
Representative Saundra Meyer
Representative Bill Thompson
Representative Jane Wostenberg
Senator Jim Anderson
Representative Kurt Bucholz
Senator Jayne Mockler (October 6)
Senator Rea Lynn Job (October 6)
Mark Quiner, Assistant Director
Dean Temte, Legislative Analyst
Please refer to Appendix
1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.
Co-Chairman Cohee called the meeting to order at 8:30 a.m. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 2 to review the Committee Meeting Agenda.
Representative Childers moved to adopted the Minutes from the August 18 & 19, 2004 Committee meeting. The motion passed.
Mr. Mike Geesey, Director of the Department of Audit, requested that a bill be drafted clarifying the time for a mineral audit. The bill was drafted and entitled Mineral audit period, 05LSO-0176.W2. See Appendix 3. It would clarify when an audit must be commenced and when the audit must be finished. Mr. Bruce Hinchey, Executive Director of the Petroleum Association of Wyoming thanked the committee and indicated he appreciated working with Mr. Geesey on the language. The old language in the statute could cause problems for audit periods.
Mr. Anthony Faccione of Burlington Resources indicated he also worked with the Department of Audit on this bill. He may have a concern over the amended return that is filed and whether the Department of Audit can reopen the entire year of auditing based on that amended return. He feels the industry can manage that concern on their own.
Mr. Marion Loomis of the Wyoming Mining Association and Mr. Bill Hartzler of Foundation Coal also provided the committee with information and generally supported the bill as drafted.
Following discussion the committee worked the bill.
Senator Mockler moved that on page 4, line 12 the word "shall" be changed to "may". The amendment passed.
Representative Lockhart moved that on page 4, line 4 strike the word "period". The motion passed.
Following discussion Representative Anderson moved the committee sponsor the bill as a Revenue Committee bill as amended. The motion passed with a roll call vote of 11 ayes and 0 noes (see Appendix 4).
Senator Mockler, Chairman of the Intangible Property Subcommittee, provided the committee with an update on the subcommittee's actions. She indicated the subcommittee has met three times thus far. The committee has done extensive research on the issue of taxation of intangible property. She indicated the Supreme Court opinions on the matter have impact beyond the telecommunication industries. The subcommittee is still working on definitions of intangible and tangible property. The subcommittee plans to meet again Friday, October 22, and will attempt to develop a bill to maintain the status quo on the personal and commercial property tier taxed at 9.5% as well as the mineral tax tier which is taxed at 100%. She indicated the subcommittee will also present a bill calling for a more in‑depth study of intangible property, including the 3 tiers and whether taxpayers are in the right tier.
Mr. Ed Schmidt, Department of Revenue, explained that NOVC's cause a problem for county budgets. He indicated that a recent Supreme Court opinion ruled that counties are part of the state and cannot bring a separate suit challenging the valuation of minerals which are done by the Department of Revenue. Mr. Schmidt indicated he has created a committee called IMPAC from representatives of the Department of Audit, Department of Revenue, and county officials. The purpose of the committee is to work with interested parties so that all involved understand mineral valuation and audit issues.
Mr. Randy Bolles of the Department of Revenue provided extensive information on NOVC's that have occurred during the past seven years (see Appendix 5).
Representative Dave Edwards introduced the Converse County Treasurer, Mr. Joe Shell and the Converse County Assessor, Ms. Dixie Huxtable. They provided information on the impact of NOVC's upon Converse County including a specific example (see Appendix 6). They suggested there be some sort of incentive granted to mineral taxpayers who report proper valuation for taxation purposes.
Ms. Kathy Ball, Uinta County Assessor, indicated the work that is going into this effort is appreciated. She indicated that if NOVC's are held for one year, so a lot of money is held up for the whole year which counties cannot use.
Senator Erb indicated that the 250 foot radius around well heads within which services are taxable under state law has caused a great deal of problems for oil field service providers.
Mr. Rich Winterholler of R & G Electric indicated the law creates a problem for his crews when they are out in the field servicing wells. He indicated it is difficult to tell if the crew is within the 250 foot radius thus requiring them to keep track of services rendered that are taxable to the operator.
Mr. Robert Tompkins of the Department of Revenue provided extensive information on the issue of oil field services taxation including materials which he provides in training format in seminars provided around the state (see Appendix 7). Mr. Tompkins also provided information on the language changes made to the statutes (see Appendix 8).
Following discussion the committee asked for research and information on how other states tax oil field services.
Later in the meeting Representatives Childers, Wostenberg and Senator Erb agreed to study the information from other states.
Mr. Wade Hall of the Department of Revenue provided information on involving the proper taxation of mobile drilling rigs. He indicated it may be difficult at times to tell whether a mobile drilling rig has been registered as a motor vehicle or whether the vehicle is paying ad valorem property tax as mobile machinery (see Appendix 9).
Ms. Dorothy Elsom, Johnson County Assessor, provided the committee with information on the specifics and the difficulty of catching and properly registering or taxing mobile drilling rigs in Johnson County.
Ms. Cindy Baldwin of the Wyoming County Treasurer's Association and Ms. Brenda Arnold of the Wyoming County Assessor's Association indicated that the problem is still being studied by the assessors and treasurers and other county officials and there may be suggestions to resolve the issue in the future.
Mr. Randy Bolles of the Department of Revenue provided the committee with information on tertiary production. He indicated that a formal report will be done by December 1 of this year (see Appendix 10).
Mr. Quiner of the Legislative Service Office and Mr. Randy Bolles of the Department of Revenue provided the committee with an update on the current usage of the econometric model. It was indicated that very little use has been made of the model. The committee requested someone from the University of Wyoming be available at the next meeting to explain the elements of the econometric model.
There being no further business, the meeting was adjourned at approximately 3:40 p.m.
Mr. Greg Schaefer of Arch Coal provided the committee with an update on coal lease bonus bids (see Appendix 11).
Senator Peck briefly explained the bill, which the committee requested from its previous meeting, on redistributing money over the $155 million dollar severance tax cap (see Appendix 12).
Mr. George Parks of the Wyoming Association of Municipalities thanked the committee for considering the bill. He provided extensive information on the revenue distributions to cities and towns as a result of de-earmarking (see Appendix 13).
Ms. Jodi Guerin, City Council Member of Laramie, thanked the committee for their efforts to assist city governments. She indicated the state money recently received by the City of Laramie went to help staff needs and raises for health insurance coverage.
Mr. Dwayne Evenson, Mayor of the City of Gillette, indicated there is still no money from the state level for municipal street projects. He indicated the state money recently received was helpful, but the City of Gillette is looking at a $23 million waste water treatment center needed due to the growth. He indicated Gillette spends $5 million a year building streets and the state should look at some way to assist municipalities on the cost of constructing and maintaining streets.
Mr. Joe Bush, City Councilman for Cody and Ms. Lori Kadrich, City Administrator for Cody, provided the committee with information on the effects of de-earmarking as it has impacted the City of Cody (see Appendix 14). Mr. Bush indicated that Cody is suffering the impacts of de-earmarking and the state should consider a direct appropriation to cities to address their funding needs. He objected to the inclusion of the municipal rainy day account distribution and its overall impact on de-earmarking. He also expressed support for giving municipalities the authority to impose an optional sales tax if the county in which the municipality is located refuses the tax.
Ms. Jackie Flowers, Public Works Director of the City of Sheridan, thanked the committee for the extensive focus on municipality needs. She indicated the state money received by the City of Sheridan was welcomed and it did help. However, the city is still in the midst of a two year hiring freeze due to budgetary constraints.
Mr. Joe Evans of the Wyoming County Commissioners Association expressed support of the bill and indicated the legislature was following through with its commitment that severance tax monies be used following de-earmarking to meet local government needs. He supports the county distribution formula for state funds in section 305 of chapter 95 of the 2004 Wyoming Session Laws and would prefer this formula to the one in the draft bill.
Ms. Marilyn Connolly, Johnson County Commissioner, indicated she supports the bill and hopes it passes.
Mr. Charlie Ware of the Wyoming Association of General Contractors indicated a majority of his members do the road work on the streets in this state. His association supports the bill and thinks it is a good idea to flow money back to the local government entities. He would also like to propose that money go to the Department of Transportation to help make up for the loss of revenue due to de-earmarking.
Mr. Dean Temte of the Legislative Service Office provided extensive information on the fiscal impact due to de-earmarking at the local government level (see Appendix 15).
Mr. Quiner then explained the working of the bill which would apply to the severance taxes received over $155 million in any year.
Representative Johnson moved the bill be amended to allow maintenance and construction for the county road fund. The motion was withdrawn.
Representative Lockhart moved to increase fixed maintenance for the counties. The motion was withdrawn.
Representative Johnson moved that the 4% distributed to counties for roads be split between the counties and cities at 2% each. The motion failed.
Representative Cohee moved that paragraph (v) be amended to be distributed as follows: 1) Communities of 50 or below - $10,000.00 each; 2) Communities of 51 to 100 - $30,000.00 each; 3) Communities of 101 and up - $50,000.00 each; 4) After that the balance to be distributed under paragraph (d)(viii). The motion passed.
Representative Cohee moved that paragraph (vi) be amended to allow for 15% of the money to be distributed evenly to the 23 counties and the remaining 85% be distributed by population. The motion passed.
Representative Childers moved to decrease the general fund amount to 23% and add 2% to cities and towns for street and alley construction and maintenance to be distributed in the same proportion as paragraph (viii). The motion passed.
Representative Anderson moved to limit the new distribution to the 2005-2006 biennium only and after that go back to the old law. The motion failed with a roll call vote of 3 ayes and 7 noes (see Appendix 16).
Following discussion Representative Lockhart moved the committee sponsor the bill as amended. The motion passed with a roll call vote of 10 ayes and 4 excused (see Appendix 16).
Mr. Tom Forslund of the City of Casper explained a proposal to the committee regarding a method of financing community development within a municipality (see Appendix 17). The proposal would promote development and economic stability in municipalities by funding the developments with property taxes and excise taxes generated from within the municipality. Following discussion Representative Cohee moved that a bill be drafted for consideration by the committee at its next meeting. The motion passed.
Ms. Marilyn Connolly, Johnson County Commission, and Mickie Stewart of the Coalbed Methane Coordination Coalition provided a power point presentation on a proposal to develop a mineral development assistance fund on severance tax distributions over the $155 million cap (see Appendix 18).
Following the presentation and discussion, the committee thanked the participants but took no official action on the proposal at this time.
Chairman Peck then provided opportunity for each committee member to make any comments regarding what the committee is studying and any proposals for future consideration.
Following discussion Chairman Peck adjourned the meeting at approximately 1:00 p.m.
Respectfully submitted,
Senator Peck, Co-Chairman