Natural gas valuation. 06LSO-0287.C1
FISCAL NOTE
The proportionate profits valuation method currently used by the Department of Revenue is under appeal before the Wyoming Supreme Court, with a decision pending. The fiscal impact of this bill is dependant upon the outcome of that Supreme Court decision. Therefore, fiscal impact estimates under two possible scenarios are provided.
Scenario one:
The State Supreme Court upholds the decision of the Wyoming State Board of Equalization stating that taxes and royalties are a direct cost of producing natural gas.
|
|
FY 2008 |
FY 2009 |
|
|
NON-ADMINISTRATIVE IMPACT |
|
|
|
|
Anticipated Revenue Increase: |
|
|
|
|
BUDGET RESERVE ACCOUNT |
501,000 |
175,000 |
175,000 |
|
GENERAL FUND |
251,000 |
87,000 |
87,000 |
|
PERM. MINERAL TRUST FUND |
537,000 |
188,000 |
188,000 |
|
AD VALOREM TAX |
0 |
526,000 |
526,000 |
Source of revenue increase:
Reduction of the
processing deduction for processed gas. This decrease in the processing
deduction will increase the taxable value of processed natural gas, therefore
increasing severance and ad valorem taxes collected from natural gas production
in the state.
Assumptions:
The State Supreme Court upholds the decision of the Wyoming
State Board of Equalization stating that taxes and royalties are a direct cost
of producing natural gas.
Gas plants that are currently
being valued using the comparable value method will continue to be valued in
that manner.
The severance tax rate
for all gas production is six percent (6%).
The county ad valorem tax rate for all gas production is seven percent (7%).
The above estimates are based on October 2005 CREG projections.
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Scenario two:
The State Supreme Court overturns the decision of the Wyoming State Board of Equalization stating that taxes and royalties are a direct cost of producing natural gas.
|
|
FY 2007 |
FY 2008 |
FY 2009 |
|
NON-ADMINISTRATIVE IMPACT |
|
|
|
|
Anticipated Revenue Increase: |
|
|
|
|
BUDGET RESERVE ACCOUNT |
7,091,000 |
6,133,000 |
6,133,000 |
|
GENERAL FUND |
3,545,000 |
3,066,000 |
3,066,000 |
|
PERM. MINERAL TRUST FUND |
7,597,000 |
6,570,000 |
6,570,000 |
|
AD VALOREM TAX |
0 |
18,397,000 |
18,397,000 |
Source of revenue increase:
Reduction of the
processing deduction for processed gas.
This decrease in the processing deduction will increase the taxable
value of processed natural gas, therefore increasing severance and ad valorem
taxes collected from natural gas production in the state.
Assumptions:
The State Supreme Court overturns the decision of the Wyoming
State Board of Equalization stating that taxes and royalties are a direct cost
of producing natural gas.
Gas plants that are
currently being valued using the comparable value method will continue to be
valued in that manner.
The severance tax rate
for all gas production is six percent (6%).
The county ad valorem tax rate for all gas production is seven percent (7%).
The above estimates are based on October 2005 CREG projections.
Prepared by: Craig Grenvik, Dept. of Rev. Phone: 777-5237
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