HB 45 extended the tax break for all new oil and gas production enacted by the Legislature in 1995 (HB 150). Originally, the tax break applied to wells drilled between July 1, 1993, and March 31, 1998; HB 45 extended this period until March 31, 2003.

The tax break lowers the severance tax from 6% to 2% on production of up to 60 barrels a day of oil for the first two years, or until the price received by the producer equals at least $22 a barrel for the preceding six months.

Similarly, the severance tax is reduced from 6% to 2% on production of up to 360 MCF of gas per day for the first two years, or until the price received by the producer equals at least $2.75 per MCF for the preceding six months.

According to a report prepared by the Wyoming Oil & Gas Conservation Commission and the Wyoming Department of Revenue - Mineral Tax Division, the severance tax losses due to this tax break equalled $2.6 million for FY 1995 and $3.8 million for FY 1996.

(At the time the break was first enacted in 1995, the Legislative Service Office estimated the cost to the General Fund at a total of $3.8 million for fiscal years 1996 through 1998.)

Proponents of HB 45 argued that continuing the tax "incentive" would help maintain tax revenues by encouraging new production.

Opponents pointed out that there is no evidence to show that the tax break (as opposed to rising oil and gas prices) stimulates new production, so Wyoming may be unnecessarily sacrificing revenue.

An attempt to shorten the extension of the tax break from 2003 to 2001 failed on a voice vote. Another amendment to place the new production tax break on a sliding scale (in effect when prices are low, not in effect when prices are high) also failed on a voice vote.

HB 45 passed the House, 44-13 (3 excused), and the Senate, 27-3.