FISCAL NOTE
Date Requested: February 09, 2026
Time Requested: 09:32 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3643 |
Comm. Sub. |
SB706 |
|
|---|
| CBD Subject: |
Natural Resources |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
22,000 |
11,000 |
11,000 |
| Personal Services |
0 |
11,000 |
11,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
22,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-63,000,000 |
-105,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, natural gas and oil wells drilled and completed after June 30, 2026, would have their Severance Tax rate reduced from 5.00% to 3.25% for a period of 24 consecutive production months calculated from the date of first sale of natural gas or oil. During this same 24-month period, the local government share would increase from 10% to 15.5%. Passage of this bill would reduce General Revenue Fund collections by up to $25 million in FY2027, $40 million in FY2028, and $42 million in FY2029 and each year thereafter at current prices. The net allocation to local governments would increase slightly beginning in FY2028 due to slight bump in tax sharing ratio for new wells.
Additional administrative costs incurred by the State Tax Department would be $22,000 in FY2026 and $11,000 per year in FY2027 and subsequent fiscal years.
Memorandum
The stated purpose of this bill relates to the amount of severance tax on newly drilled oil and natural gas wells.
The proposed new tax rate in this bill appears to only apply to new wells that are hydraulically fractured and not to conventional wells. This bill is silent regarding at what point in the fracturing process a well is hydraulically fractured.
This bill sets the Severance Tax rate for new wells at 3.25% of the gross value of production for a period of 24 months calculated from the date of first sale. The bill is silent regarding the possibility of a break in production once production starts, and whether the “24 consecutive months” continues during the break or whether the count begins again when production restarts. Further, this bill is silent whether the proposed Severance Tax rate of 3.25% or the existing 5% rate applies once the 24 consecutive months period is completed.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov