FISCAL NOTE
Date Requested: January 11, 2023
Time Requested: 10:15 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1152 |
Introduced |
HB2454 |
|
|---|
| CBD Subject: |
|
|---|
|
FUND(S):
General Revenue Fund, West Virginia Black Lung Program
Sources of Revenue:
General Fund
Legislation creates:
Creates New Revenue, Decreases Existing Revenue, Creates New Expense, Increases Existing Expenses
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 benefit 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 vary significantly from year to year due to various economic factors. Over the past four years, collections of tax on coal, natural gas, and oil varied from a low of roughly $260 million in Tax Year 2020 to an estimated high of roughly $1.05 billion in Tax Year 2022. The yield from Business and Occupation Taxes on wind power generation is generally less than $2 million per year. Based on past history, an additional 10 percent surtax on those activities would potentially yield between $26.2 million and $105.2 million per year for the new State funded Black Lung Benefit Program.
According to our interpretation, the provisions of this bill would also allow a non-refundable 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 4,537 federal Black Lung claims in West Virginia. Data provided by Workforce WV indicates that there have been roughly 20,000 miners employed in the state, on average, over the past 15 years. However, due to vagueness in the language of the bill regarding the eligibility of the taxpayer claiming the credit, the estimated amount of revenue cannot be reasonably determined. The cost of the credit could easily exceed $48 million per year if most affected taxpayers have pre-credit State income tax liability of at least $2,400.
Additional administrative costs to the Tax Department would be $50,000 in FY2024 and $61,500 in FY2025, and $45,000 in subsequent years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
50,000 |
45,000 |
| Personal Services |
0 |
5,000 |
45,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
45,000 |
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 benefit 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 vary significantly from year to year due to various economic factors. Over the past four years, collections of tax on coal, natural gas, and oil varied from a low of roughly $260 million in Tax Year 2020 to an estimated high of roughly $1.05 billion in Tax Year 2022. The yield from Business and Occupation Taxes on wind power generation is generally less than $2 million per year. Based on past history, an additional 10 percent surtax on those activities would potentially yield between $26.2 million and $105.2 million per year for the new State funded Black Lung Benefit Program.
According to our interpretation, the provisions of this bill would also allow a non-refundable 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 4,537 federal Black Lung claims in West Virginia. Data provided by Workforce WV indicates that there have been roughly 20,000 miners employed in the state, on average, over the past 15 years. However, due to vagueness in the language of the bill regarding the eligibility of the taxpayer claiming the credit, the estimated amount of revenue cannot be reasonably determined. The cost of the credit could easily exceed $48 million per year if most affected taxpayers have pre-credit State income tax liability of at least $2,400.
Additional administrative costs to the Tax Department would be $50,000 in FY2024 and $61,500 in FY2025, and $45,000 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.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov