Congress’ recent vote to slice federal Abandoned Mine Land payments to coal states may have a substantial impact on current and future projects in Gillette.
Congress voted in late June to limit all states to $15 million a year of AML funding. Wyoming was the only state receiving more than $15 million. As the nation’s largest coal-producing state, Wyoming has been receiving roughly $150 million of AML money annually. That equates to about $720 million over the next decade that Wyoming will lose.
The AML money comes from a 35-cent tax on each ton of coal. It was established in 1977 to clean up abandoned mines, mostly in the East. But 50 percent of it was supposed to be returned to states from which the coal was taken once abandoned mines had been cleaned up. That hadn’t happened before 2006, at which point delegates from coal states were successful in getting the federal government to start paying back the accumulated money. Wyoming’s last payments of $82.7 million annually were to end in fiscal year 2014.
The cut in AML money was to help pay for transportation work and lower student loan rates.
“What the fed government has done is implemented a tax for a specific purpose, and then stole the money and applied it to something else,” said state Rep. Tom Lubnau, R-Campbell County.
It affects Gillette because the Madison water pipeline project is partially funded by AML money.
“It means that the state of Wyoming will have to find dollars from a different revenue source,” Lubnau said.
The state has promised to pay for two-thirds of the $225 million Madison pipeline project, and loan the remaining one-third until the locally approved Capital Facilities Tax raises enough money. Of that total bill, $48.4 million came out of AML funds for the past two years — $25.4 million in 2011 and $23 million in 2012. The state still has two more years to dish out money for the Madison project.
Lubnau believes the state has shown a commitment to Gillette’s water project, but it’s an election year and a lot can change now that Wyoming lost a huge influx of money, he said.
Local leaders are optimistic that the state will uphold its commitment to the project.
Mayor Tom Murphy doesn’t think the cut in AML money will impact the water project. It might cause the state to shrink its budget even further, but the water project should be safe.
The state knows that 40 percent of its revenue is coming from mineral production and taxes in northeastern Wyoming. It knows that in order to continue that trend and increase investment, the community needs water, Murphy said.
There have been several requests for water from outlying industries, that cannot tap on because there simply isn’t enough water, he added. All they get is fire suppression. That will change with the new Madison line.
“Why would you cut short the thirst of the golden goose?” Murphy asked. “We’re thirsty here. It’s very difficult to grow business, industry and continue to increase that revenue stream.”
Gillette has demonstrated that it has done everything it can do in terms of water conservation and has done everything the state has asked Gillette to do. The people of Gillette and Campbell County voted in the Cap Tax, showing their commitment to paying its portion of the project, he added.
“We are presently on board to pay our one-third share and for the state to go back on their word would be not right,” Murphy said.
City Administrator Carter Napier also remains optimistic.
“The state has been a really great partner,” Napier said. “They’ve really come to bat for us in terms of helping us with this project.”
Together, the state and the city of Gillette will work through the issues, Napier said. Loss of the AML money is a hit to the state, but he believes the state sees the importance of the projects and that the partnership will continue.
While Murphy believes state funding of the project will continue, he also hopes the setback won’t slow down the project. He wants to see efforts to speed up the project if possible.
The state already has extended the Madison project’s deadline because the Wyoming Water Development Commission took six months to permit two water wells in an area that already had been drilled 30 years prior, he said.
Murphy expects that the cut in AML funding will delay future water projects or other projects lined up for state money. That also could include potential projects in Gillette.
The state used AML money in previous years to help fund projects such as the reconstruction of Highway 59 to Bishop Road into four lanes. The money also was used to finance clean coal research at the University of Wyoming and helped to make Wyoming products more marketable, Lubnau said.
The gist of it is that all of those funds that enhanced Wyoming’s economy now will be unavailable unless Wyoming’s delegation is successful in restoring the funding, Lubnau added.