CHEYENNE — Wyoming lawmakers want to consider draft legislation that would split sales-tax money from new multi-county energy projects — such as pipelines and powerlines — among the affected counties.
The state Legislature’s Joint Revenue Committee on Monday voted unanimously to pursue the statute. The committee is likely to discuss the bill again at its next meeting in September.
Dan Noble, with the state Department of Revenue’s Excise Tax Division, told lawmakers that current Wyoming tax law allows a company to pay sales and use tax on materials needed for major projects — pipe for an oil pipeline, for example — only in the part of the state which the materials are first stored.
That currently means a company planning a pipeline route through Crook, Weston, Niobrara, Platte and Laramie counties, but storing materials in Casper until the site is ready for construction, could pay sales and use taxes only in Natrona County.
“Is it appropriate for storage to trump use?” Noble said. “The way the statute’s written today, it does.”
The policy has caused concern in some counties.
Noble told the committee of one recent instance during which pipe to be used on a ONEOK-owned pipeline crossing five Wyoming counties was first stored and treated in Nebraska, meaning the Wyoming’s eastern neighbor was able to charge sales tax instead.
Noble said cases like ONEOK’s, where no sales tax revenues end up in counties directly impacted, got him and a few other parties to work on how to solve the problem. Lawmakers even proposed two bills to address the issue in the most recent legislative session, but both were eventually pulled back for further research.
Monday’s meeting allowed the Revenue Committee to take early steps in how to restructure the tax system and give each county a share.
The group heard testimony from several involved parties, including Cindy DeLancey, executive director of the Wyoming County Commissioners Association.
DeLancey told the committee that commissioners in her association had discussed the problem. Many agreed that a solution would include a way to compensate both the counties in which building materials are stored and the counties in which they’re installed. She cited pipelines as an example.
“Counties that have developed an economic model around having pipe yards, if the legislature decides to change policy, they would essentially be left out in the cold,” she said. “The commissioners don’t see this as an either/or situation.”
Noble noted several challenges in drafting such a law. Among the biggest obstacles would be defining how big a project must be to qualify for taxes in multiple counties, and how the state should treat companies that stockpile pipeline and other materials in yards merely as an inventory measure, not as preparation for a specific project.
The committee discussed one option which would include business consultation with the Revenue Department within a certain amount of time of the products’ entry into Wyoming.
Larry Wolfe, a Cheyenne attorney specializing in energy and natural resources, told the committee that a law to change the current tax structure would have to be carefully constructed.
“The issues, when you start getting into the details, are what’s tough,” he said, adding that any draft bill would need to carefully set definitions.
Sen. Michael Von Flatern, R-Gillette, asked whether the bill would include only certain industries or all projects which crossed county lines.
Rep. John Eklund, R-Cheyenne, proposed late in the meeting that the committee draft and consider a bill which creates a review system to distribute sales tax revenue from large, multi-county projects between each affected county. The motion passed unanimously.
DeLancey said she hoped the state could eventually pass a law which doesn’t make it more difficult to do business in multiple Wyoming counties.
“This is the backbone of our economy in Wyoming,” she said. “In no way do we want the local levels of government to start putting in red tape. This really is an issue of fundamental fairness.”