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Changes in WY coal production may call for changes in tax structure

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Wednesday, May 29, 2024   

A new policy could affect the future of coal mining in the Powder River Basin and in turn, Wyoming's tax structure.

The Powder River Basin produced nearly 44% of the country's coal last year, at 252 million tons. The U.S. Bureau of Land Management has proposed ending new federal coal leases there and, if approved, the state may need to restructure its tax revenue streams.

Robert Godby, associate professor of economics at the University of Wyoming, said there is no easy substitute for the coal industry's contributions to the tax base, especially since much of the coal is exported, and Wyoming benefits from taxing its importers.

"The challenge is we will have to find multiple sectors of economic development to replace the private benefit that coal creates," Godby explained.

If the new policy moves ahead, Godby pointed out the state will need to use caution in taxing other industries, building new revenue streams without chasing business out of Wyoming. The coal industry is responsible for about 20,000 jobs and roughly $250 million in state tax revenue, which largely funds K-12 schools across Wyoming.

The continuation of current leases means coal production in the area would play out through about 2041. The proposal is being touted as a win for climate advocates, and Gov. Mark Gordon has said he plans to act against it.

Godby noted coal production has already been declining for years as renewable energy sources and the oil and gas industries have grown.

"While the moratorium on the face of it seems very significant, the reality is that market forces may already be leading to the same outcome anyway, regardless of the moratorium," Godby contended.

The comment period for the BLM's moratorium on new coal leases is open through June 17.


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