COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 372

(By Senators Kessler (Acting President) and Hall, By request of the Executive)

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[Originating in the Committee on Energy, Industry and Mining;

reported February 25, 2011.]

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A BILL to amend and reenact §11-13A-20a of the Code of West Virginia, 1931, as amended; and to amend and reenact §31-15A-16 of said code, all relating to dedication of coalbed methane severance tax proceeds; redirecting coalbed methane severance tax revenues from the Infrastructure Fund to the Coalbed Methane Severance Tax Fund; requiring moneys deposited in the Infrastructure Fund prior to July 1, 2011, be distributed to the Coalbed Methane Severance Tax Fund; providing calculation methods; specifying a minimum share of coalbed methane severance tax revenue be provisionally allocated to producing counties in an amount at least equal to the share received by nonproducing counties; providing for portional adjustments and redesignation for counties deemed nonproducing; providing that no distribution of moneys to exceed total amount of coalbed methane severance tax received in any fiscal year; creating the Coalbed Methane Severance Tax Revenue Fund to be administered by the Development Office; requiring county commissions to apply to the Development Office to obtain grants from such funds; requiring approval of respective county commissions and the Development Office prior to expending any funds; and authorizing and requiring the Development Office to promulgate legislative rules regarding use of funds, including emergency rules.

Be it enacted by the Legislature of West Virginia:

    That §11-13A-20a of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that §31-15A-16 of said code be amended and reenacted, all to read as follows:

CHAPTER 11. TAXATION.

ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.

11-13A-20a. Dedication of tax; authorization of the development office to promulgate rules.

    (a) The amount of taxes collected under this article from providers of health care items or services, including any interest, additions to tax and penalties collected under article ten of this chapter, less the amount of allowable refunds and any interest payable with respect to such refunds, shall be deposited into the special revenue fund created in the State Treasurer's Office and known as the Medicaid State Share Fund. Said fund shall have separate accounting for those health care providers as set forth in articles four-b and four-c, chapter nine of this code.

    (b) Notwithstanding the provisions of subsection (a) of this section, for the remainder of fiscal year 1993 and for each succeeding fiscal year, no expenditures from taxes collected from providers of health care items or services are authorized except in accordance with appropriations by the Legislature.

    (c) The amount of taxes on the privilege of severing timber collected under section three-b of this article, including any interest, additions to tax and penalties collected under article ten of this chapter, less the amount of allowable refunds and any interest payable with respect to such refunds, shall be paid into a special revenue account in the State Treasury to be appropriated by the Legislature for purposes of the Division of Forestry.

    (d) Notwithstanding any other provision of this code to the contrary, beginning January 1, 2009, there is hereby dedicated an annual amount not to exceed $4 million from annual collections of the tax imposed by section three-d of this article to be deposited into the West Virginia Infrastructure Fund, created in section nine, article fifteen-a, chapter thirty-one of this code.

    (e) Beginning with the fiscal year ending June 30, 2009, and each fiscal year thereafter, the Tax Commissioner shall pay from the taxes imposed in section three-d of this article, on October 1, of each year, into the West Virginia Infrastructure Fund in the Coalbed Methane Severance Tax Revenue Fund as provided in subsections (f) through (h) of this section, an amount in the aggregate not to exceed $4 million per fiscal year. Prior to making any such payment the commissioner shall deduct the amount of refunds lawfully paid and administrative costs authorized by this code. All moneys distributed in the West Virginia Infrastructure Fund pursuant to this section prior to July 1, 2011, shall be deposited in the Coalbed Methane Severance Tax Revenue Fund as provided in this section.

    (f) The Tax Commissioner shall provide to the West Virginia Infrastructure and Jobs Development Council Development Office a breakdown of coalbed methane taxes paid and amount of coalbed methane produced by county. The commissioner may obtain any production or other necessary information not currently reported to the commissioner from the owners or operators of coalbed methane wells or from the Department of Environmental Protection or both. Notwithstanding any provision of this article to the contrary, prior to the deposit of the proceeds of the tax on coalbed methane in the Coalbed Methane Severance Tax Revenue Fund pursuant to subsection (e) of this section, the Tax Commissioner shall undertake the following calculations:

    (1) Seventy-five percent of the moneys to be deposited shall be provisionally allocated for the various counties of this state in which the coalbed methane was produced; and

    (2) The remaining twenty-five percent of the moneys to be deposited shall be provisionally allocated equally to the various counties of this state in which no coalbed methane was produced for projects in accordance with subsection (i) of this section.

    (3) Moneys shall be provisionally allocated to each coalbed methane producing county in direct proportion to the amount of tax revenues derived from coalbed methane production in the county.

    (4) Portional adjustments.

    (A) If, for any year, a coalbed methane producing county’s share of money provisionally allocated to that county is computed to be an amount that is less than the amount provisionally allocated to each of the coalbed methane nonproducing counties, then for purposes of the computations set forth in this subsection, that coalbed methane producing county shall be redesignated a coalbed methane nonproducing county. The money that has been provisionally allocated to that coalbed methane producing county out of the seventy-five percent portion specified in subdivision (1) of this subsection shall be subtracted out of the seventy-five percent portion specified in that subdivision and added to the twenty-five percent portion specified in subdivision (2) of this subsection.

    (B) When the adjustment specified in paragraph (A), subdivision (4) of this subsection has been made for each coalbed methane producing county that has been redesignated as a coalbed methane nonproducing county, then the Tax Department shall finalize the calculations of the amounts to be made available for distribution to the respective county of the coalbed methane producing counties that have not been redesignated as coalbed methane nonproducing counties under subdivision (4) of this subsection as follows: The amount remaining in the provisional seventy-five percent portion specified in subdivision (1) of this subsection, as adjusted in accordance with paragraph (A), subdivision (4) of this subsection, shall be allocated, in direct proportion to the amount that tax revenues derived from coalbed methane production in each such county not redesignated as a coalbed methane nonproducing county bears to the total amount of tax revenues derived from coalbed methane production in all coalbed methane producing counties that have not been redesignated as a coalbed methane nonproducing county.

    (C) The Tax Commissioner shall then finalize the calculation of the total amount in the twenty-five percent portion specified in subdivision (2) of this subsection, as adjusted in accordance with paragraph (A), subdivision (4) of this subsection.

    (g) In no case may the total amount distributed in any fiscal year to the aggregate of all coalbed methane producing counties and all coalbed methane nonproducing counties calculated by the Tax Commissioner exceed the total amount of tax on coalbed methane authorized to be remitted to the Coalbed Methane Severance Tax Revenue Fund pursuant to subsection (e) of this section.

    (h) Creation of the Coalbed Methane Severance Tax Revenue Fund.(1) There is hereby created a fund in the State Treasury on behalf of the Development Office entitled the Coalbed Methane Severance Tax Revenue Fund which shall be a revolving fund that shall carry over each fiscal year and shall not lapse to the General Fund. Moneys in the Coalbed Methane Severance Tax Revenue Fund shall be dedicated to and distributed among the counties as provided in this section. Appropriation of the Coalbed Methane Severance Tax Revenue Fund is authorized by collection.

    (i) Administration of the Coalbed Methane Severance Tax Revenue Fund.

    The Director of the Development Office is hereby authorized and empowered to administer the distribution of moneys in the Coalbed Methane Severance Tax Revenue Fund.

    (A) On or before the plan submission due date prescribed by the Director of the Development Office, a county commission may annually, or with such frequency as may be prescribed by the Director of the Development Office, submit a plan to the Director of the Development Office for use of the county’s share of the Coalbed Methane Severance Tax Revenue Fund.

    (B) A grant of moneys out of the Coalbed Methane Severance Tax Revenue Fund shall only be distributed to a county after approval by the Director of the Development Office of the plan for use of the county’s share of the fund, submitted to the Director of the Development Office by the county commission. The Director of the Development Office shall approve the county’s plan for use if the plan for use reasonably conforms to the requirements of this section and the legislative rules authorized thereto: Provided, That for funds attributable to coalbed methane producing counties, the Director of the Development Office shall distribute the moneys in the form of grants to each of those counties in accordance with the calculations provided by the Tax Commissioner in subsection (f) of this section for economic development projects approved by the Director: Provided, however, That for funds attributable to coalbed methane non-producing counties after subsection (f) adjustments, the Director of the Development Office shall make the total amount of moneys calculated pursuant to subsection (f) of this section available in the form of grants to one or more of the coalbed methane non-producing counties for economic development projects approved by the Director: Provided further, That the Director may award all or part of the amounts available for one or more economic development and infrastructure projects, based on applications made by the counties pursuant to the provisions of this section.

    (C) If the county’s plan is approved, the Director of the Development Office may authorize a grant of money out of the Coalbed Methane Severance Tax Revenue Fund to the county to be used by the county for economic development and infrastructure projects as specified in the approved plan for use.

    (D) The Director of the Development Office may authorize distribution of any amount for the use of a county and carried over from a prior period in accordance with applicable plans for use previously approved.

    (E) The Director of the Development Office may authorize expenditures for any county of moneys in the Coalbed Methane Severance Tax Revenue Fund, up to the amount of the county’s share for the fiscal year, for one or more qualified economic development and infrastructure projects specified in the county’s plan for use if the county’s approved plan for use of the moneys sets forth a qualified use for the county’s share over a period of several fiscal years or a qualified use of the moneys calling for accumulation and distribution to the county in one or more subsequent fiscal years. Previously approved funds may carry over to succeeding fiscal years and may be used to accumulate reserves over a period of time for use by a county.

    (j) The moneys remitted by the tax Commissioner for infrastructure projects in 2009 and 2010 in non-producing coalbed methane counties that have not been distributed shall not be distributed to those counties but instead shall be available for distribution for economic development projects pursuant to the provisions of subsection (i) of this section.

    (o) Promulgation of rules by the Director of the Development Office authorized. – The Director of the Development Office, in his or her discretion, may promulgate an emergency rule as provided in article three, chapter twenty-nine-a of this code that clarifies, explains or implements the provisions of this section and the distribution of moneys out of the Coalbed Methane Severance Tax Revenue Fund. The Director of the Development Office is hereby granted continuing authority to promulgate in accordance with article three, chapter twenty-nine-a of this code such interpretive, legislative or procedural rules, or any combination thereof, for administration of the Coalbed Methane Severance Tax Revenue Fund as the Director of the Development Office may find necessary and appropriate including any reporting requirements as deemed necessary to ensure that such funds are utilized as intended by the Legislature. The Director of the Development Office may prescribe criteria for qualification under the economic development project requirement of this section.

CHAPTER 31. CORPORATIONS.

ARTICLE 15A. WEST VIRGINIA INFRASTRUCTURE AND JOBS DEVELOPMENT ACT.

§31-15A-16. Dedication of severance tax proceeds.

    (a) There shall be dedicated an annual amount from the collections of the tax collected pursuant to article thirteen-a, chapter eleven of this code for the construction, extension, expansion, rehabilitation, repair and improvement of water supply and sewage treatment systems and for the acquisition, preparation, construction and improvement of sites for economic development in this state as provided in this article.

    (b) Notwithstanding any other provision of this code to the contrary, beginning on July 1, 1995, the first $16 million of the tax collected pursuant to article thirteen-a, chapter eleven of this code shall be deposited to the credit of the West Virginia Infrastructure General Obligation Debt Service Fund created pursuant to section three, article fifteen-b of this chapter: Provided, That beginning on July 1, 1998, the first $24 million of the tax annually collected pursuant to article thirteen-a of this code shall be deposited to the credit of the West Virginia Infrastructure General Obligation Debt Service Fund created pursuant to section three, article fifteen-b of this chapter.

    (c) Notwithstanding any provision of subsection (b) of this section to the contrary: (1) None of the collections from the tax imposed pursuant to section six, article thirteen-a, chapter eleven of this code shall be so dedicated or deposited; and (2) the portion of the tax imposed by article thirteen-a, chapter eleven and dedicated for purposes of Medicaid and the Division of Forestry pursuant to section twenty-a of said article thirteen-a shall remain dedicated for the purposes set forth in said that section twenty-a.

    (d) On or before May 1 of each year, commencing May 1, 1995, the council, by resolution, shall certify to the Treasurer and the Water Development Authority the principal and interest coverage ratio and amount for the following fiscal year on any infrastructure general obligation bonds issued pursuant to the provisions of article fifteen-b of this chapter.

    (e) Notwithstanding any provision of this article to the contrary, the tax on coalbed methane remitted by the Tax Commissioner for deposit in the West Virginia Infrastructure Fund pursuant to section twenty-a, article thirteen-a, chapter eleven of this code, shall be distributed as follows:

    (1) Seventy-five percent of the moneys so deposited shall be distributed for infrastructure projects in the various counties of this state in which the coalbed methane was produced; and

    (2) The remaining twenty-five percent of the moneys so deposited shall be distributed equally to the various counties of this state in which no coalbed methane was produced for infrastructure projects. Moneys shall be distributed to each coalbed methane producing county in direct proportion to the amount of tax paid by the county using information provided by the Tax Commissioner as required in section twenty-a, article thirteen-a, chapter eleven of this code.

    NOTE: The purpose of this bill is to specify that a minimum share of coalbed methane severance tax revenue be distributed to producing counties in an amount at least equal to the share received by nonproducing counties. The bill also amends the code to direct the severance tax revenues for coalbed methane producing and nonproducing counties be deposited in the newly created coalbed methane severance tax revenue fund, in lieu of the infrastructure fund, and to be distributed by the development office.

    Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.