FISCAL NOTE
Date Requested: January 10, 2020
Time Requested: 01:06 PM |
| Agency: |
Environmental Protection, Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1488 |
Introduced |
HB4090 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
Oil and Gas Abandoned Well Plugging Fund
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
As to the overall effect that HB4090 will have on the Severance Tax as a whole, DEP does not have the necessary financial data to provide a reasonable basis for a conclusion and therefore defers to the WV State Tax Department on an estimates they may have presented. As for the numbers presented here, DEP can only provide an estimate based on data presented by WVONGA (West Virginia Oil and Natural Gas Association) and factoring in that market fluctuations will have a significant effect on those estimates.
DEP data shows that approximately 20,504 wells will be in the new 2.5% tax bracket. Of the total taxable production of gas and oil during 2018, these well represented approximately 5% of the total production. According to a FY2018 WVONGA report, an estimated $138,800.000 was collected in severance tax from oil and gas production. Of that amount, DEP is expected to collect an estimated $3.5 million annually.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
1,750,000 |
3,500,000 |
3,500,000 |
| Personal Services |
0 |
200,000 |
200,000 |
| Current Expenses |
1,750,000 |
3,300,000 |
3,300,000 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
1,750,000 |
3,500,000 |
3,500,000 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
Personal Services is expected to increase due to the fact that additional staff will be needed to manage and oversee the additional work of plugging the additional wells this funding will provide. Current Expenses is expected to increase, due to the ability to close an additional 20 wells annually.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
None
Person submitting Fiscal Note: Gary Rogers
Email Address: gary.w.rogers@wv.gov