H. B. 4473

         (By Delegates Armstead, Lane, Householder,

         Ellem, O’Neal, Walters, Canterbury, C. Miller,

                   Sumner, Kump and Romine)

         [Introduced February 9, 2012; referred to the

         Committee on Finance.]

A BILL to amend and reenact §11-13A-20a of the Code of West Virginia, 1931, as amended, relating to dedicating a portion of natural gas severance tax proceeds; creating the Surplus Natural Gas Severance Tax Fund; redirecting a portion of natural gas severance tax revenues from the Surplus Natural Gas Severance Tax Fund to county assessors of each county; setting forth amounts of deposits and distributions; and requiring moneys redirected to county assessors to be applied to reduce the personal property tax rate applied to certain personal property held or used for commercial use.

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 to read as follows:

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, to the respective county economic development authorities or county commissions 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 to the West Virginia Infrastructure Fund pursuant to this section prior to July 1, 2011, shall be returned to the Tax Commissioner and distributed to the respective county economic development authorities or county commissions as provided in this section.

    (f) Notwithstanding any provision of this article to the contrary, prior to the deposit of the proceeds of the tax on coalbed methane with each county economic development authority or county commission 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 to the various counties of this state in which no coalbed methane was produced for projects in accordance with subsection (h) 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) Moneys shall be provisionally allocated to each coalbed methane nonproducing county equally.

    (5) 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 development authority or county commission 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 equally among the coalbed methane nonproducing counties.

    (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 county economic development authority or county commission pursuant to subsection (e) of this section.

    (h) Distribution of coalbed methane severance tax to county economic development authorities or county commissions is subject to the following: 

    (1) If the amount determined pursuant to subsections (f) and (g) of this section for a county is more than $10,000, the Tax Commissioner shall distribute the amount determined for that county to the economic development authority of that county created pursuant to article twelve, chapter seven of this code for the purposes of encouraging economic development in the county.

    (2) Each county economic development authority shall use such funds for the following upon a finding by the county economic development authority that the cost of such projects are reasonably anticipated to lead to further economic development of the county:     (i) The cost of preparation of land sites for any public or private facility; or

    (ii) The cost of design or construction of water, sewer and stormwater infrastructure.

    (3) Prior to expending any coalbed methane severance tax moneys, each county economic development authority must obtain the approval of its respective county commission in writing for the purpose of such expenditure.

    (4) Prior to expending any coalbed methane severance tax moneys, each county economic development authority must obtain the approval of the development office in writing for the purpose of such expenditure. The development office shall approve all plans for use of the moneys if such plans are within the required uses provided in subdivision (2) of this subsection. The Director of the State Development Office shall promulgate legislative rules in accordance with article three, chapter twenty-nine-a of this code in order to set forth the required documentation to be submitted to the development office from the county economic development authorities to ensure that such funds are utilized as intended by the Legislature. The Director of the Development Office is authorized to promulgate emergency rules to implement the provisions of this section.

    (5) A county or county economic development authority may not use such funds for the purposes of paying wages to any employee of the county or any employee of a county economic development authority.

    (6) If the amount determined pursuant to subsections (f) and (g) of this section for a county is $10,000 or less, the Tax Commissioner shall distribute the amount determined for that county to the county commission. The county commission may then use the funds to offset its regional jail costs, costs of any community corrections programs in which it participates, expenses of a volunteer fire department that provides service within its county or expenses of any library that provides services within its county.

    (i) Notwithstanding any other provision of this code to the contrary, beginning July 1, 2013, and in each succeeding fiscal year on July 1, there is hereby dedicated from the total annual collections for the privilege of engaging in or continuing within this state in the business of severing natural gas for sale, profit or commercial use the extraction of natural gas, 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 those refunds, an amount equal to the excess of the total annual collections over $60 million, which excess shall be deposited into a special revenue fund created in the State Treasurer's office and known as the Surplus Natural Gas Severance Tax Fund. Other moneys may be appropriated to this fund from time to time from any sources as the Legislature may direct.

    (j) Distribution of the Surplus Natural Gas Severance Tax Fund is subject to the following:

    (1) Beginning July 1, 2014, and for each succeeding fiscal year until the fiscal year, if any, in which a Constitutional Amendment is approved eliminating the personal property tax on inventory and equipment held for commercial use, the distributions from the Surplus Natural Gas Severance Tax Fund shall be made as appropriated by the Legislature for the purpose of tax reduction for the benefit of the citizens of the State of West Virginia as it deems appropriate: Provided, That no more than fifty percent of each fiscal year’s annual increase in the Surplus Natural Gas Severance Tax Fund may be so appropriated; and

    (2) Contingent upon the passage of a Constitutional Amendment which approves eliminating the personal property tax on inventory and equipment held for commercial use, within sixty days of July 1 in the first fiscal year following the effective date of that amendment, the treasurer shall distribute from the balance of the Surplus Natural Gas Severance Tax Fund on a proportionate basis to the respective county commissions an amount of moneys which shall be apportioned among the levying units of the state in proportion to the levy laid upon the Class III and Class IV personal property held for ongoing commercial use within each levying unit as reported on the certificate of valuation filed by each county with the Department of Tax and Revenue for the preceding year: Provided, That, the distribution to a county may occur only if that county has had an increase of less than twenty five percent in the total assessed value of the Class III and Class IV personal property held for commercial use as compared to the value of these categories as reported in the preceding year’s certificate of valuation.

    NOTE: The purpose of this bill is to dedicate a portion of natural gas severance tax proceeds. The bill redirects a portion of natural gas severance tax revenues from the Surplus Natural Gas Severance Tax Fund to county assessors of each county. The bill sets forth amounts of deposits and distributions. The bill requires funds redirected to county assessors to be applied to reduce the personal property tax rate applied to certain personal property held or used for commercial use

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