CASPER – As Wyoming coal producers spend more money to chase Powder River Basin coal seams that slant into the earth, their state severance tax rate climbs.
State legislators on Friday will take a look at breaking that connection, a move lauded by the mining companies but one that will likely cost the state millions of dollars in lost revenue over the coming years.
As the companies follow the coal seams further west, the seams head deeper underground. That means the companies need to spend more more money to strip away the ground above the coal, also known as overburden, to get to the seams.
Under the current formula used by the state to calculate the severance tax, rising mining costs, such as the purchase of a new conveyor system, boost the taxable value of the companies’ work. So companies have found themselves paying a higher tax rate each year, just for pushing further into the basin’s coal seams. (photo credit: Tim Kupsick/Casper Star-Tribune)