February 18, 2025 - A bill to reduce coal’s severance tax rate — a tax on the extraction of natural resources — from 6.5% to 6% is moving through the Senate after passing the House easily.

The Senate Revenue Committee, chaired by Sen. Troy McKeown, R-Gillette, passed House Bill 75 Wednesday on a 3-1 vote, with Sen. Cale Case, R-Lander, being the only no vote.

The bill passed the Senate’s Committee of the Whole on Thursday, and it passed its second reading in the Senate on Friday. It had previously made it out of the House on a 57-4 vote.

The bill would lower the severance tax rate on coal from 6.5% to 6%, putting it on “equal footing” with oil and natural gas, said Rep. Ken Clouston, the bill’s sponsor.

“The goal is, by reducing this (tax rate), we hope to enhance Wyoming’s business environment, make it more desirable,” he said.

Clouston added that Wyoming coal is competing not just against oil and natural gas, but coal from other states.

Travis Deti, executive director of the Wyoming Mining Association, said the coal industry carries the heaviest tax burden in the state. This bill, if passed, would bring coal to the same severance tax rate as oil and natural gas.

Commissioner Jim Ford said Campbell County has had a “front row seat” to the effects of the last reduction in coal’s severance tax rate.

In 2022, former Rep. Tim Hallinan sponsored a bill to cut the rate from 7% to 6.5%.

“Our sales tax increased, wages went up a little, it helped the economy — in a small place in Wyoming, I understand that,” said Sen. Troy McKeown, R-Gillette, adding that he helped Hallinan write that bill.

Case pushed back a bit, saying this was purely anecdotal.

“You don’t know what the path would’ve been with or without the tax, we didn’t study that, there was just a good feeling that things were better with the half cent reduction,” Case said.

Deti said the coal industry will be in Wyoming for many years to come.

“They’ve been writing the obituary of the industry for a long time, but it’s just not true,” Deti said.

That reduction in the severance tax rate should allow the coal companies to invest more in their operations in Wyoming, Deti said.

The Wyoming Taxpayers Association and the Wyoming Business Alliance also voiced their support for the bill.

There was discussion on whether the reduction would lead to an increase in coal production.

“We studied the issue of whether lowering severance tax would increase production, it was very negative,” Case said.

“We’re not claiming at all that a reduction is going to increase production, because it’s based on demand,” Deti said. “What it will do is make us more competitive.”