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2006 Budget Session
HB 21, together with HB 19, represented the latest in a series of attempts to increase the caps placed by the Legislature on the amount of mineral taxes that are automatically distributed to local governments, highways, schools, and water development. HB 21 dealt specifically with federal mineral royalties.
Every year, Wyoming receives hundreds of millions of dollars from federal mineral royalties and state mineral severance taxes. Specific percentages of this mineral revenue automatically flow into certain accounts, including local governments, highways, schools, and water development.
This designated distribution of mineral revenue, known as earmarking, was intended to provide the recipient programs with a reliable revenue source and to help distribute mineral revenue among local governments, schools and other programs across the state more equally to benefit citizens statewide.
In 2000, the Legislature established caps on the amount of mineral revenue that could be distributed into earmarked accounts. The 2000 legislation (modified in 2001) specified that up to $200 million in federal mineral royalties would be distributed following the formula as defined by statute, but any revenue above $200 million would flow into the school foundation account and the budget reserve account.
Local governments - towns, cities and counties - have been particularly hard hit by the caps. In many cases, as mineral revenues have increased, so have the financial needs of towns, cities and counties. Under capped revenue distribution, local governments across the state aren't receiving enough money to cover basic local government needs.
Ever since enacting these spending caps, the Legislature has struggled (mostly unsuccessfully) to correct problems created by the caps.
HB 21 would have increased the cap on federal mineral royalty distribution from $200 million to $250 million, so that every year an additional $50 million would have flowed into the earmarked accounts.
The Legislative Service Office calculated that increasing the federal mineral royalty distribution to earmarked accounts by $50 million would cause local governments (towns, cities and counties) to receive $6.5 million more per year than they presently receive. The highway fund would receive an additional $16.1 million per year, school capital construction and foundation funds would receive $6.8 million more annually, the University of Wyoming would receive $3.4 million for capital construction projects per year, and the general fund would gain $500,000 per year.
HB 21 passed the vote for introduction, but died when it was not reported out of the House Revenue Committee by the deadline for committee action.