LARAMIE — Mineral revenues have been in decline in Wyoming over the past decade, which has resulted in a corresponding drop in funding for Wyoming’s public schools. How to address that loss of revenue from oil and gas leases was a major topic of conversation at a state trust land forum at the University of Wyoming on Tuesday.
Around 88% to 90% of the leasing revenue the Office of State Lands and Investments (OSLI) generates each year comes from oil and gas.
Although the agency is projected to raise a respectable $241 million in 2025, former OSLI Acting Director Jason Crowder pointed out that $100 million of this total is coming from the sale of the Kelly Parcel in Teton County.
Other trust land revenue typically amounts to only about $15 million to $18 million per year.
“That’s not a normal number because the sale of the Kelly Parcel really does skew these numbers,” Crowder said.
Revenue from mineral leases is expected to be $123 million in 2025, the lowest sum in Wyoming in four years.
OSLI is constitutionally obligated to generate the highest rate of monetary return possible on its state trust lands to benefit the state.
However, there is an exception built in for grazing leases. The state charges a below-market rate of $5.97 per animal unit month for grazing on state lands, a fee higher than what the BLM charges for grazing on federal land in most states, and about 45% to 55% below the average grazing rate on private lands, Crowder said.
Crowder mentioned how the state had a $3,000 per year grazing lease on the Kelly Parcel, a deal he described as “completely out of whack.”
Agriculture receives a sweetheart deal through state law, originating from the Legislature’s desire to embrace Wyoming’s ranching heritage.
Targeting Exemptions
State Rep. Bob Davis, R-Baggs, leases state and BLM land for his cattle. Even though Davis wouldn’t benefit from a grazing rate hike and said any increases will be fought hard by the agriculture community, he said this and other solutions should be on the table.
He mentioned that his state leasing rates have only marginally increased over the past 27 years.
“It’s something we should look at,” he said. “The state leases haven’t kept up with that market value.”
Sen. Mike Gierau, D-Jackson, agreed and has a pessimistic outlook on Wyoming’s economic future. Gierau said he would like to study how much impact the reduced grazing leases have and said he would support getting rid of all tax exemptions in Wyoming, which amount to around $180 million in lost revenue per year.
“That’s some money, that’s some cake,” he said. “It’s easy to say ranching is in our DNA when there’s not a price to go with those things.”
Rep. Steve Johnson, R-Cheyenne, doesn’t believe any of these solutions are the answer and that the state needs to recognize it has a spending problem rather than a lack of funding.
“I think we need to live within our means,” he said. “We have a spending problem, probably not a taxation problem.”
About 86% of the revenues generated from trust lands go into the state’s Common School Account. The Legislature is obligated under the Wyoming Constitution to fund public schools adequately and evenly.
Although the details of this requirement have been fought out in court many times, outgoing Attorney General Bridget Hill said what’s clear is that the Legislature gets to decide the “basket of goods” that gets funded.
Other Solutions
Maria Katherman, who lives between Douglas and Glenrock believes the state needs to take a more holistic view at the way it charges and uses its trust lands, which are not always managed the same as public lands owned by the federal government.
For instance, when asked on Tuesday if OSLI considers the recreational and tourism benefits contained in a piece of land, Crowder offered an unequivocal no.
“It’s something that we can grow into but since it doesn’t have that specific benefit to the beneficiaries, we don’t supply that information to the Board of Land Commissioners,” he said.
Katherman said the state should consider a broad set of factors including the future benefits and potential of a property when it makes leasing decisions.
She brought up the example of a controversial gravel pit approved in Casper last year as why she believes the current system used by the Board of Land Commissioners isn’t working.
“I think that by narrowing the value of the land to money … that’s only one of the benefits these lands can provide,” Katherman said.
Cheyenne resident Marguerite Herman believes the Legislature should devote more money to fund schools out of the general fund so that it can keep its grazing fees at the same rate.
Sen. Larry Hicks, R-Baggs questioned Hill if deriving revenue off state lands meets the definition of a governmental purpose, or whether this is simply a fiduciary responsibility.
In her answer, Hill deflected and referenced a 2024 Wyoming Supreme Court ruling that counties can charge the state government property tax for its lands. The ruling has broad implications and impacts ranchers who rent state lands for grazing, who could have to shoulder the burden of the increased cost.
Hicks believes the Supreme Court made the wrong decision in this ruling, which he believes will cost the state $1.5 million in property taxes that would otherwise go to public schools.
It is up to the Legislature to make changes to the law on this issue.
Although it would have an indirect benefit to the state’s coffers, State Treasurer Curt Meier mentioned to Cowboy State Daily how his office is exploring ways to utilize $1 billion to $1.5 billion in investment earnings to help bring more manufacturing to the state.
“It’s directing the use of our money in the highest and best use,” Meier said. “We want to take advantage of the fact the Trump administration is helping us build back together across America.”
Crowder also mentioned how the state doesn’t have a 25-year plan for how it will raise revenues moving forward, something Gierau said he’d like to see.
Leo Wolfson can be reached at leo@cowboystatedaily.com.
