FISCAL NOTE

Date Requested: February 01, 2016
Time Requested: 01:22 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1732 Introduced SB359
CBD Subject: Natural Resources


FUND(S):

Special Reclamation Fund, Special Reclamation Water Trust Fund

Sources of Revenue:

Special Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to establish requirements for performance bonds by operators; providing the amount and method of bonding; establishing that issuance of bonds be limited to Mining Mutual Insurance Company beginning one year after it is funded; establishing purpose for bonds; requiring the secretary to submit plan to allow additional entities to issue bonds; allowing secretary to issue bond without additional surety under certain circumstances; prohibiting owner from interfering with operator obligations; continuing the Special Reclamation Fund; creating and administering the Special Reclamation Water Trust Fund; creating requirements for tax credits for operators reclaiming or remediating sites; allowing Tax Commissioner to promulgate rules regarding tax credits; establishing special reclamation tax rates; establishing review by Legislature of special reclamation tax; establishing secretary’s duties for special reclamation program; establishing Tax Commissioner’s duties for special reclamation tax; prohibited acts; establishing liability for special reclamation tax; and requiring approval from federal agency before implementation of section if necessary.
    
    Based on our interpretation, changes to current tax rates as proposed in West Virginia Code §22-3-11(j)(1) et seq. would reduce the special reclamation taxes per ton of clean coal mined to a total of 15 cents per ton from the current cumulative rate of 27.9 cents per ton after the Mining Mutual Insurance Company is funded. Revenue losses of approximately $11.8 million are expected for the Special Reclamation Fund and Special Reclamation Water Trust Fund, combined, for the first full year this tax reduction is in place.
    
    Additional administrative costs incurred by the State Tax Department are expected to be $29,000 in the first full year of implementation of the proposed bill.
    
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 29,000
Personal Services 0 0 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 19,000
2. Estimated Total Revenues 0 0 -11,800,000


Explanation of above estimates (including long-range effect):


    Based on our interpretation, changes to current tax rates as proposed in West Virginia Code §22-3-11(j)(1) et seq. would reduce the special reclamation taxes per ton of clean coal mined to a total of 15 cents per ton from the current cumulative rate of 27.9 cents per ton after the Mining Mutual Insurance Company is funded. Revenue losses of approximately $11.8 million are expected for the Special Reclamation Fund and Special Reclamation Water Trust Fund, combined, for the first full year this tax reduction is in place.
    
    Additional administrative costs incurred by the State Tax Department are expected to be $29,000 in the first full year of implementation of the proposed bill.
    



Memorandum


    The stated purpose of this bill is to establish requirements for performance bonds by operators; providing the amount and method of bonding; establishing that issuance of bonds be limited to Mining Mutual Insurance Company beginning one year after it is funded; establishing purpose for bonds; requiring the secretary to submit plan to allow additional entities to issue bonds; allowing secretary to issue bond without additional surety under certain circumstances; prohibiting owner from interfering with operator obligations; continuing the Special Reclamation Fund; creating and administering the Special Reclamation Water Trust Fund; creating requirements for tax credits for operators reclaiming or remediating sites; allowing Tax Commissioner to promulgate rules regarding tax credits; establishing special reclamation tax rates; establishing review by Legislature of special reclamation tax; establishing secretary’s duties for special reclamation program; establishing Tax Commissioner’s duties for special reclamation tax; prohibited acts; establishing liability for special reclamation tax; and requiring approval from federal agency before implementation of section if necessary.
    
    There appears to be a typing error affecting subsections (i) and (j) in West Virginia Code §22-3-11(h)(2)(A), emphasis added: “A tax credit shall be granted against the tax imposed by subsection (j)…”
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov