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Coal woes cast doubt over state's revenue growth

SHERIDAN — Recent reports indicate state tax revenues continued to grow through the end of fiscal year 2019, but recent disruptions in the state’s energy sector have cast doubt as to whether that growth can continue.

Jim Robinson, principal economist in the Wyoming Department of Administration and Information’s Economic Analysis Division, said statewide sales and use tax collections and severance tax collections saw large year-over-year gains in fiscal year 2019.

Much of the mining sector growth was driven by oil production, but even if oil production continues to grow, it cannot make up for the continued decline of the coal sector, Robinson said.

Earlier this month, however, Blackjewel, LLC declared bankruptcy and shuttered two of its mines in the Powder River Basin, leaving nearly 600 Wyoming workers in limbo. Blackjewel recently announced it will sell the two Powder River Basin mines to Contura Energy, opening the possibility that some of those jobs can be recovered. Because the situation is still developing, it’s too soon to tell exactly how Blackjewel’s bankruptcy will affect the state.

But the mine closures could have significant and far-reaching impacts, Robinson said.

“We just don’t know yet,” Robinson said. “But there certainly is a ripple effect, if you look at potential revenues that would be lost to the state.”

With less coal production, Robinson explained the state will collect less severance tax, receive fewer federal royalties, collect less property tax because of the mine closures and see less sales and use tax revenue because of the increased unemployment.

Further, Robinson said, companies that do business with the coal industry could also take a hit.

“It’s not just the direct job loss with the miners, it’s going to be much bigger than that,” Robinson said.

While Sheridan and Sheridan County don’t have strong ties to coal production, Robinson said aftershocks of the mine closure could be felt locally.

“Once you start to see state revenues being impacted, that is one of those things that has a statewide impact,” Robinson said. “Certainly all of the counties in Wyoming will feel some impact.”

Still, Campbell County, and Gillette in particular, will likely feel the greatest impact of the Blackjewel bankruptcy, Robinson said. And the latest numbers show the city of Sheridan’s tax revenues have continued to grow steadily.

Sheridan Treasurer Karen Burtis presented Sheridan’s Sales and Use Tax numbers for July, the first month of the city’s 2020 fiscal year, during a recent city council meeting; the July numbers reflect taxes collected in May.

Sheridan’s sales tax is up 1.9% — from $310,426 in July 2018 to $316,232 in July 2019 — and the city’s use tax collections are up 25.2% — from $23,145 in July 2018 to $28,969 in July 2019 — which amounts to an overall 3.5% increase in Sheridan’s Sales and Use Tax revenue this year, Burtis said.