FISCAL
NOTE
WEST virginia Legislature
2017 regular session
By
[
to the Committee on Energy then Finance.
A BILL to amend the Code
of West Virginia, 1931, as amended, by adding thereto a new section, designated
§11-13A-5c, relating to reallocating and
dedicating three percent of oil and gas severance tax revenues up to $20
million annually to the oil and gas producing counties of origin and their
respective municipalities; establishing state and local oil and gas county reallocated
severance tax funds and providing for distribution of the moneys to the county
commissions and governing bodies of the municipalities by the State Treasurer;
establishing amounts each oil and gas producing county and their respective
municipalities are to receive; requiring the creation of local funds into which
moneys are to be deposited; requiring moneys be expended solely for economic
development projects and infrastructure projects; providing definitions;
providing restrictions on the expenditure of moneys; providing duties of State
Tax Commissioner; requiring report of expenditures to Joint Committee on
Government and Finance; providing audits of distributed funds when authorized
by the Joint Committee on Government and Finance; and authorizing legislative
and emergency rules
Be it enacted by the
Legislature of West Virginia:
That the Code of West
Virginia, 1931, as amended, be amended by adding thereto a new section,
designated §11-13A-5c, to read as follows
ARTICLE 13A. SEVERANCE AND BUSINESS
PRIVILEGE TAX ACT.
§11-13A-5c.
Reallocation and dedication of percentage of severance tax for benefit
of oil and gas producing counties and their municipalities; permissible uses of
distributed revenues; duties of State Treasurer and State Tax Commissioner;
audits; rule-making.
(a) The purpose of this section is to provide for the
reallocation and dedication of a portion of the tax attributable to the
severance of oil and gas imposed by section three-a of this article for the use
and benefit of the various counties and their respective municipalities in
which the oil and gas was located at the time it was severed from the ground.
(b) (1) Effective July 1, 2017, two percent of the tax
attributable to the severance of oil and gas imposed by section three-a of this
article shall be transferred to the county commissions of the oil and gas
producing counties as provided in this section.
(2) Effective July 1, 2017, one percent of the tax
attributable to the severance of oil and gas imposed by section three-a of this
article shall be transferred to the governing bodies of municipalities within
the oil and gas producing counties as provided in this section on a population
pro rata basis.
(3) The proceeds dedicated in subdivisions (1) and (2) of
this subsection may not exceed the sum of $20 million per year.
(c) The amounts of the tax dedicated in subsection (b) of
this section shall be deposited, from time to time, into a special fund known
as the Oil and Gas County and Municipality Reallocated Severance Tax Fund,
which is hereby established in the State Treasury, as the proceeds are received
by the State Tax Commissioner.
(d) The net proceeds of the deposits made into the Oil and
Gas County and Municipality Reallocated Severance Tax Fund shall be allocated
among and distributed quarterly to the oil and gas producing counties and their
respective municipalities by the State Treasurer in the manner specified in
this section. On or before each
distribution date, the State Treasurer shall determine the total amount of
moneys that will be available for distribution to the respective counties and
municipalities entitled to the moneys on that distribution date. The amount to which an oil and gas producing
county or municipality is entitled from the Oil and Gas County and Municipality
Reallocated Severance Tax Fund shall be determined in accordance with
subsection (e) of this section. After determining the
amount each oil and gas producing county and municipality are entitled to
receive from the fund, a warrant of the State Auditor for the sum due to each oil and gas producing county
and municipality shall be issued and a check drawn thereon making payment of
that amount to the oil and gas producing county and municipality by hand, mail
commercial delivery or electronic transmission.
(e) The amount to which an oil and gas producing county or
municipality is entitled from the Oil and Gas County and Municipality
Reallocated Severance Tax Fund shall be determined by:
(1) Dividing the total amount of moneys in the fund then
available for distribution by the total number of barrels of oil and total
number of cubic feet of gas produced in this state during the preceding
quarter; and
(2) Multiplying the quotient thus obtained of each by number
of barrels of oil and number of cubic feet of gas produced in the county or
municipality during the preceding quarter.
(f) (1) No distribution made to a county or municipality
under this section may be deposited into the county's or municipality's General Revenue
Fund. The county commission of each county and the governing body of each
municipality receiving a distribution under this section shall establish a
special account to be known as the "(Name of County or
Municipality) Oil and Gas County (or Municipality) Reallocated Severance Tax
Fund" into which all distributions made
to that county or municipality under this section shall be deposited.
(2) Moneys in the county's and municipality's oil and gas county
reallocated severance tax funds shall be expended by the county commission and
governing body of the municipality solely for economic development projects and
infrastructure projects.
(3) For purposes of this section:
(A) "Economic development project" means a project in the state which is likely to foster
economic growth and development in the area in which the project is developed
for commercial, industrial, community improvement or preservation or other
proper purposes.
(B) "Infrastructure
project" means a project in the state
which is likely to foster infrastructure improvements including, but not
limited to, post-mining land use, water or wastewater facilities or a part
thereof, storm water systems, steam, gas, telephone and telecommunications,
broadband development, electric lines and installations, roads, bridges,
railroad spurs, drainage and flood control facilities, industrial park
development or buildings that promote job creation and retention.
(4) A county commission or governing body of a municipality
may not expend any of the funds available in its oil and gas county and
municipality reallocated severance tax fund for personal services, for the
costs of issuing bonds or for the payment of bond debt service. Total funds available shall be directed to
project development which may include the costs of architectural and
engineering plans, site assessments, site remediation, specifications and
surveys and other expenses necessary or incidental to determining the
feasibility or practicability of an economic development project or infrastructure
project.
(g) On or before December 31, 2018, and December 1 of each
year thereafter, the county commission of each county and governing body of
each municipality receiving a distribution of funds under this section shall
deliver to the Joint Committee on Government and Finance a written report
setting forth the specific projects for which those funds were expended during
the preceding fiscal year, a detailed account of those expenditures and a
showing that the expenditures were made for the purposes required by this
section.
(h) An audit of funds distributed under this section may be
authorized at any time by the Joint Committee on Government and Finance to be
conducted by the Legislative Auditor at no cost to the county commission
audited.
(i) The State Tax Commissioner shall propose for legislative
approval legislative rules pursuant to article three, chapter twenty-nine-a of
this code for the administration of the provisions of this section, and is
authorized to promulgate emergency rules for those purposes pursuant to that
article.
NOTE: The purpose of this bill is to reallocate and
dedicate three percent of oil and gas severance tax revenues up to $20 million
annually to the oil and gas producing counties of origin and their respective
municipalities. The bill establishes state and local oil and gas county
reallocated severance tax funds and provides for distribution of the moneys to
the county commissions and governing bodies of the municipalities by the State
Treasurer. The bill establishes a procedure for determining the amounts each
oil and gas producing county and their respective municipalities are to receive
and requires the creation of local funds into which moneys are to be deposited.
The bill requires the funds to be used solely for economic development projects
and infrastructure projects. The bill also provides restrictions on fund
expenditures. The bill sets forth duties of the State Tax Commissioner. The bill requires a report of expenditures to
Joint Committee on Government and Finance. The bill also provides for audits of
distributed funds when authorized by the Joint Committee on Government and
Finance. The bill authorizes legislative and emergency rules.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.