FISCAL NOTE
Date Requested: January 28, 2020
Time Requested: 04:41 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2517 |
Introduced |
SB624 |
|
|---|
| CBD Subject: |
Health |
|---|
|
FUND(S):
West Virginia Black Lung Program
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Revenue, Creates New Expense
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to create the West Virginia Black Lung Program and granting entitlement for pain and suffering for occupational pneumoconiosis.
The provisions of this bill attempt to create a new State funded Black Lung Benefit Program for miners and retirees who worked in coal mines for a period of at least 10 years. The program would be funded by new surtaxes on mining companies and certain electric power generation companies. This fiscal note only addresses the tax related provisions within this bill. Any costs associated with the new State funded benefited program would come from the agency administering the new benefit program.
As written, the tax provisions of this bill may be too vague to be properly administered. However, based on our interpretation of Legislative intent, the bill would create the West Virginia Black Lung Program to be funded from an additional tax imposed on severance of natural resources and generation of electricity by wind and solar devices. The provisions of the bill attempt to impose a 10 percent surtax on the severance of coal, natural gas and oil. Combined State and local severance taxes on coal, natural gas and oil are anticipated to yield roughly $320 million in Fiscal Year 2021. Therefore, a 10 percent surtax would be expected to yield roughly $32 million. In addition, the bill attempts to place a 10 percent surtax on electrical power generated from wind and solar devices even though those activities are not subject to severance tax. A 10 percent surtax on this sector’s Business and Occupation Tax would yield roughly $0.3 million per year. The total annual revenue yield for this new Black Lung Fund might be roughly $32.3 million in Fiscal Year 2021 with revenue yield in future years largely fluctuating with changes in the economic activities of the coal, natural gas and oil industries.
The provisions of this bill would also allow a personal income tax credit for taxpayers who received benefits from the new State funded Black Lung Benefit Fund equal to the amount of payments received each year. The minimum annual payment would be $2,400 per year for someone with 10 to 15 years of exposure with the payment rising above $5,000 for someone with 30 or more years of exposure. According to federal statistics, there are currently 4,606 federal Black Lung claims in West Virginia. The proposed State funded program would provide benefits to significantly more individuals than the federal program with total costs to the State General Revenue Fund from the income tax credit alone easily exceeding $10 million per year. Total program costs, including the proposed tax credit, could easily exceed total new revenues from the proposed new taxes.
Additional administrative costs to the Tax Department would be $40,000 in FY2022 and $55,000 in FY2023, and $40,000 in subsequent years
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
40,000 |
40,000 |
| Personal Services |
0 |
0 |
40,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The provisions of this bill attempt to create a new State funded Black Lung Benefit Program for miners and retirees who worked in coal mines for a period of at least 10 years. The program would be funded by new surtaxes on mining companies and certain electric power generation companies. This fiscal note only addresses the tax related provisions within this bill. Any costs associated with the new State funded benefited program would come from the agency administering the new benefit program.
As written, the tax provisions of this bill may be too vague to be properly administered. However, based on our interpretation of Legislative intent, the bill would create the West Virginia Black Lung Program to be funded from an additional tax imposed on severance of natural resources and generation of electricity by wind and solar devices. The provisions of the bill attempt to impose a 10 percent surtax on the severance of coal, natural gas and oil. Combined State and local severance taxes on coal, natural gas and oil are anticipated to yield roughly $320 million in Fiscal Year 2021. Therefore, a 10 percent surtax would be expected to yield roughly $32 million. In addition, the bill attempts to place a 10 percent surtax on electrical power generated from wind and solar devices even though those activities are not subject to severance tax. A 10 percent surtax on this sector’s Business and Occupation Tax would yield roughly $0.3 million per year. The total annual revenue yield for this new Black Lung Fund might be roughly $32.3 million in Fiscal Year 2021 with revenue yield in future years largely fluctuating with changes in the economic activities of the coal, natural gas and oil industries.
The provisions of this bill would also allow a personal income tax credit for taxpayers who received benefits from the new State funded Black Lung Benefit Fund equal to the amount of payments received each year. The minimum annual payment would be $2,400 per year for someone with 10 to 15 years of exposure with the payment rising above $5,000 for someone with 30 or more years of exposure. According to federal statistics, there are currently 4,606 federal Black Lung claims in West Virginia. The proposed State funded program would provide benefits to significantly more individuals than the federal program with total costs to the State General Revenue Fund from the income tax credit alone easily exceeding $10 million per year. Total program costs, including the proposed tax credit, could easily exceed total new revenues from the proposed new taxes.
Additional administrative costs to the Tax Department would be $40,000 in FY2022 and $55,000 in FY2023, and $40,000 in subsequent years
Memorandum
The stated purpose of this bill is to create the West Virginia Black Lung Program and granting entitlement for pain and suffering for occupational pneumoconiosis.
As written the bill does not accomplish its purpose. The bill is too vague to be administered. It is unclear who would qualify for the West Virginia Black Lung Program and how someone would apply for the Program. Terms are not defined, and the bill is contradictory. The Personal Income Tax Credit and the additional taxes on coal, oil and natural gas and the generation of electric power by solar or wind power are also vague. This bill does not attempt to coordinate the collection of the tax with the deposit of the revenue into the State Black Lung Fund and with the date that payouts may be due from the State Black Lung Fund.
The effective date provided in this bill is July 1, 2012.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov