It's a largely Old
West fantasy that if Wyoming just had more access to federal lands,
fewer environmental regulations and minimal taxation for industry,
the state would thrive. Right now it isn't. Wyoming has missed out
on the boom (HCN, 7/7/97). While most state coffers bulge, Wyoming
expects a $183 million revenue shortfall for the 2001-2002
The irony is that in the history of the
Western United States, probably no other state but Alaska has had
such apparent good fortune. The reason has been the same: the
mining of natural resources.
In the last 40
years, Wyoming has gone from having $80 in the general fund to
having billions. But those billions don't spell general prosperity.
The wealth derives not from a broad base of well-paid employees and
entrepreneurs but from taxes on oil, gas, trona and coal, which pay
about 52 percent of the state's annual expenses. In addition, the
state has accumulated over several decades $2.8 billion in trust
accounts, funded by a severance tax on oil and coal. This money
isn't going away. Wyoming produces more coal than any other state,
and as coal is replaced over time by natural gas, then Wyoming will
capitalize on the huge gas reserves under its dry
With this money, Wyoming strives to
"rent-seek" its way to prosperity. That's economist-speak, meaning
that the state assumes that a few very large corporations, rather
than a broad and diversified economy, should pay for
There's good reason to tax large
corporations. There's no other source of income. Wyoming is
desperate for good jobs. Forty-two percent of the workforce
accounts for 70 percent of the wages. The remaining 58 percent limp
along with part-time or temporary jobs. Jobs in the minerals
industry pay higher wages than any other sector of the economy - on
average nearly $45,000 per year when the average median income for
a family in Wyoming is just over
Unfortunately, there are fewer and fewer
of the better jobs. Fifteen years ago, more than 38,000 people
worked in the minerals industry. Now the number stands at 15,000.
Energy jobs once represented nearly 20 percent of Wyoming's
workforce; today, they account for barely 7
It's a trend that Wyoming won't
acknowledge. Year after year, the state protects the energy
industry in hopes of retaining decent-paying wages. The favorite
method of protection is the use of politics to keep the taxation
and environmental burden as light as possible.
is hard to overstate the influence these interests have in
Cheyenne. "They are the most influential power in the legislature,"
says Bruce Burns, a Republican House member from Sheridan County.
"They're above anything. They dominate." Just this year, the oil
industry got a 33 percent reduction on its severance taxes as long
as oil stays under $20 per barrel.
This will cost
the state, according to Burns, "about $17 million per year. And
that bill won't save a single well."
industry's influence is centered in Cheyenne, but its impacts are
felt throughout the state, where schools and local government and
services generally are on a short leash, making it difficult for
Wyoming to create alternatives to the coal, oil, gas, trona, rail
and pipeline companies.
late August, however, the Wyoming Supreme Court issued a decision
that sent a chill down energy's collective spine. The ruling was a
victory for counties that depend on energy production to finance
their roads and sheriff departments and schools. It was a defeat
for Exxon, for Gov. Jim Geringer, and for a state bureaucracy that
had lined up with Exxon against the counties.
court ruling overturns Exxon's and Wyoming state government's
attempt to block Sublette County from examining Exxon's production
records, already on file with the state, and thereby learn whether
it had received the taxes to which it is
The Supreme Court justices, in their
ruling, said the alliance between the state and Exxon represented
"unconventional allies." The record showed that the Gov. Jim
Geringer administration fought disclosure every inch of the
One Sublette County commissioner said: "By
and large, our complaint is not against Exxon, it's against the
state of Wyoming."
The Wyoming Constitution
permits counties to tax oil and gas production in lieu of property
tax. Sublette County, in western Wyoming in the heart of the
Overthrust Belt, opted to do just this. But the county has no
control over the valuation of that oil and gas production. County
assessors determine the value of homes and retail stores, but the
chore of valuing mineral production belongs to the Department of
Revenue, the state's tax collector.
Janet Montgomery, the Sublette County assessor, began examining
graphs of local natural gas production. Since 1985, when energy
prices scraped bottom, gas production had nearly tripled. This
meant more revenue for a county that gets 85 percent of its income
from mineral taxes.
But there was a glaring
anomaly. Revenue from the county's biggest gas producer and user,
Exxon, was sinking. Yet "everyone was telling us that the Exxon
plant was running at full capacity," said
The "plant" is the $1.6 billion Exxon
facility that processes the 650 million cubic feet per day of raw
"sour" gas from the La Barge field in Sublette County. The plant,
called Shute Creek, employs 130 workers and 75 contractors. It
separates the methane, sulfur, carbon dioxide, nitrogen, natural
gas liquids and helium that the LaBarge field produces.
When county officials brought the discrepancy to
Exxon's attention, they were told their numbers were
"Exxon said they'd get back to us. They
never did," said Montgomery. Using rough estimates, Sublette County
estimated it was losing about $1.5 million per year in
In August 1996, the Sublette County
commissioners went to Cheyenne seeking an explanation. The
Department of Revenue sent some stuff, but withheld key records.
The Department of Audit would send nothing.
commissioners, all solid Republicans, then sought help from their
fellow Republican, Gov. Geringer. "He informed us being in his
office made us adversaries and that he shouldn't even be talking to
us," said former Sublette County Commissioner Buzz Wassenburg. "He
basically said that it was the Board of Equalization's bailiwick
and that it was none of our business." The Board of Equalization is
the body that handles tax appeals from the Department of Revenue.
So the commissioners went before the Board of
Equalization. The board listened, often to many voices at once. "We
had about 10 lawyers in the room telling us we should do this or
that," said former Board of Equalization chairman Dennis Tippets.
"The way I read the statutes, the board should have access to these
Tippets should know. Back when he was
a legislator, he helped write the statute. "Some of those crazy
Exxon lawyers were trying to tell me what the intent of the law
was." The board issued subpoenas requesting that then State Auditor
Dave Ferrari, State Lands Board director Stephen Reynolds, and Mike
Geesey, head of the Department of Audit, answer a few
The request didn't get far. The
Wyoming attorney general's office immediately quashed it, saying
the Board of Equalization didn't have the authority to issue such a
subpoena. Tippets was stunned.
"How can we (the
board) make a decision about taxes in Wyoming if we can't get
The quashing of the subpoenas
coincided with the end of the term of Marvin Applequist, who was
known to have actively sought the subpoenas. Gov. Geringer opted
not to reappoint him.
Then Geringer fired
Tippets, the only board member ever to be released in mid-term. He
was replaced by Ron Arnold, a lawyer who worked in the attorney's
The decision vexed many around
the state, including Tippits' former fellow board member, Marvin
Applequist. "The governor has vested himself in this Exxon case,
and I think he's offended by anything that looks like the board was
going to conduct a fair hearing on it," he told the Casper
not so much upset by his firing as by the governor's attitude.
"Philosophically, he (Geringer) fights the feds at the drop of a
hat. But when one of his political subdivisions wants to be treated
fairly, then he comes unglued and turns 57 lawyers from the AG's
office against them. The bottom line is that the state doesn't want
the counties looking at the information," said
As for the Board of Equalization,
Tippets said it now "has a staff of three lawyers who don't have a
clue, in my mind, about the appraisal process."
A lot of tax money is riding on the competence
of the Board of Equalization. Randy Fetterolf, who has audited oil
company records for counties - the energy companies call
freelancers like him "odious merchants' - is doing a study for
Wyoming county commissioners on property assessment
Blocked at the Board of Equalization,
the Sublette County Commissioners went to court, and ultimately to
the Wyoming Supreme Court. They not only won there on the
particulars of their case but also drew the court's attention to
the larger issue.
In the very last words of its
decision, the court gently reminded the Board of Equalization of
its "broad powers' and its responsibility "to carefully examine
lives in Sheridan, Wyoming. He is currently working on a book
titled Pushed Off the Mountain, Sold Down the River: Wyoming's
Search for Its Soul.