Severance tax.

14LSO-0266.L4

                                                         

CORRECTED COPY

FISCAL NOTE

 

FY 2015

FY 2016

FY 2017

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Revenue Increase (Decrease):

 

 

 

PERM. MINERAL TRUST FUND

4,000,000

4,000,000

4,000,000

BUDGET RESERVE ACCOUNT    

(26,900,000)

(27,200,000)

(27,500,000)

GENERAL FUND            

(13,500,000)

(13,600,000)

(13,700,000)

 

Source of revenue increase:

Imposition of 1.5% severance tax distributed to the Permanent Wyoming Mineral Trust Fund (PWMTF) on 1) natural gas that is vented or flared and 2) natural gas that is reinjected or consumed prior to sale on the same lease

 

Assumptions:

Of the total $4 million per year increase in revenue to the PWMTF, $3.9 million per year is attributed to taxing natural gas currently used on the same lease.

 

The above estimate assumes carbon dioxide volumetric sales and prices remain constant. The above estimate also assumes that the maximum allowed flaring permit volumes from April 2014 through April 2015 remain constant in FY 2015 – FY 2017.

 

Sources of revenue decrease:

1) Reduction of severance tax rate on surface coal from 7 percent to 6 percent, 2) reduction of severance tax rate on underground coal from 3.75 percent to 3 percent and 3) creation of a severance tax exemption on coal mined from federal lease acreage which is purchased on or after January 1, 2014;

 

Assumptions:

The severance tax rate reductions on surface coal and underground coal result in combined revenue decreases to the General Fund (GF) and Budget Reserve Account (BRA) of $40.4 million in FY 2015, $40.8 million in FY 2016, and $41.2 million in FY 2017. These revenue decreases are reflected in the table above.

 

This bill also creates a severance tax exemption for coal mined from federal lease acreage purchased after January 1, 2014, reducing the severance tax rate in this coal by one-half percent on surface coal and by 1.25 percent on underground coal. Since there are currently no coal lease sales scheduled after January 1, 2014, and since the timing of the mining of such leases is unknown, the fiscal impact of this new exemption cannot be determined. While this proposed exemption would likely have no fiscal impact in fiscal years 2015 through 2017, the fiscal impact of this exemption would eventually approach one-half of the severance tax rate reduction estimated above. Therefore in fiscal years after FY 2017, this exemption would eventually result in an estimated $18.1 million per year reduction in revenue to the GF and BRA.

 

The above revenue decreases are based on the January 2014 CREG forecast.

Prepared by:   Dean Temte, LSO       Phone: 777-7881

(Information provided by Craig Grenvik, Dept. of Revenue; 777-5237)