FISCAL NOTE
Date Requested: March 03, 2025
Time Requested: 04:02 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3558 |
Introduced |
SB651 |
|
|---|
| CBD Subject: |
Workers Compensation |
|---|
|
FUND(S):
State Black Lung Fund and General Revenue Fund
Sources of Revenue:
Other Fund State Black Lung Fund and General Revenue Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense, Creates New Fund: State Black Lung Fund
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.
The stated purpose of this bill is to create the West Virginia Black Lung Program and to grant entitlement for pain and suffering for occupational pneumoconiosis.
The provisions of this bill attempt to create a new State-funded Black Lung Benefit Program for miners and retirees who worked in coal mines for a period of at least 10 years. The program would be funded by new surtaxes on mining companies and certain electric power generation companies. This fiscal note only addresses the tax related provisions within this bill. Any costs associated with the new State-funded benefit program would come from the agency administering the new benefit program.
As written, some lack of clarity in the bill may create issues in implementation and administration. However, based on our interpretation of Legislative intent, the bill would create the West Virginia Black Lung Program to be funded from an additional tax imposed on severance of natural resources and generation of electricity by wind and solar devices. The provisions of the bill attempt to impose a 10 percent surtax on the severance of coal, natural gas, and oil.
Combined State and local severance taxes on coal, natural gas, and oil vary significantly from year to year due to various economic factors. Over the past four years, collections of tax on coal, natural gas, and oil varied from a low of roughly $261 million in Fiscal Year 2021 to a high of nearly $900 million in Fiscal Year 2023. The yield from Business and Occupation Taxes on wind power generation is generally less than $2 million per year. Based on past history, an additional 10 percent surtax on those activities would potentially yield between $26.1 million and $90.0 million per year for the new State-funded Black Lung Benefit Program.
According to our interpretation, the provisions of this bill would also allow a non-refundable Personal Income Tax credit for taxpayers who received the benefits from the new State-funded Black Lung Benefit Fund equal to the amount of payments received each year. The minimum annual payment would be $2,400 per year for someone with 10 to 15 years of exposure with the payment rising above $5,000 for someone with 30 or more years of exposure. According to federal statistics, there are currently 4,136 federal Black Lung claims in West Virginia. Data provided by Workforce WV indicates that there have been approximately 25,600 miners employed in the state, on average over the past 15 years. However, due to vagueness in the language of the bill regarding the eligibility of the taxpayer claiming the credit, the estimated amount of revenue loss cannot reasonably be determined. The cost of the credit could easily exceed $48 million per year if most affected taxpayers have pre-credit State income tax liability of at least $2,400.
Additional administrative costs to the Tax Division would be $56,650 in FY 2026 and $47,500 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
56,650 |
47,500 |
| Personal Services |
0 |
5,500 |
47,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
49,500 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
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.
The provisions of this bill attempt to create a new State-funded Black Lung Benefit Program for miners and retirees who worked in coal mines for a period of at least 10 years. The program would be funded by new surtaxes on mining companies and certain electric power generation companies. This fiscal note only addresses the tax related provisions within this bill. Any costs associated with the new State-funded benefit program would come from the agency administering the new benefit program.
As written, some lack of clarity in the bill may create issues in implementation and administration. However, based on our interpretation of Legislative intent, the bill would create the West Virginia Black Lung Program to be funded from an additional tax imposed on severance of natural resources and generation of electricity by wind and solar devices. The provisions of the bill attempt to impose a 10 percent surtax on the severance of coal, natural gas, and oil.
Combined State and local severance taxes on coal, natural gas, and oil vary significantly from year to year due to various economic factors. Over the past four years, collections of tax on coal, natural gas, and oil varied from a low of roughly $261 million in Fiscal Year 2021 to a high of nearly $900 million in Fiscal Year 2023. The yield from Business and Occupation Taxes on wind power generation is generally less than $2 million per year. Based on past history, an additional 10 percent surtax on those activities would potentially yield between $26.1 million and $90.0 million per year for the new State-funded Black Lung Benefit Program.
According to our interpretation, the provisions of this bill would also allow a non-refundable Personal Income Tax credit for taxpayers who received the benefits from the new State-funded Black Lung Benefit Fund equal to the amount of payments received each year. The minimum annual payment would be $2,400 per year for someone with 10 to 15 years of exposure with the payment rising above $5,000 for someone with 30 or more years of exposure. According to federal statistics, there are currently 4,136 federal Black Lung claims in West Virginia. Data provided by Workforce WV indicates that there have been approximately 25,600 miners employed in the state, on average over the past 15 years. However, due to vagueness in the language of the bill regarding the eligibility of the taxpayer claiming the credit, the estimated amount of revenue loss cannot reasonably be determined. The cost of the credit could easily exceed $48 million per year if most affected taxpayers have pre-credit State income tax liability of at least $2,400.
Additional administrative costs to the Tax Division would be $56,650 in FY 2026 and $47,500 in subsequent fiscal years.
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.
The stated purpose of this bill is to create the West Virginia Black Lung Program and to grant entitlement for pain and suffering for occupational pneumoconiosis.
This bill is too vague to enforce and contradicts itself. It is not clear to whom the claimant would apply or how they would apply. The bill does not address to what tribunal an appeal of a denial would be made. This section is also problematic because the threshold requirements are unclear.
A decreasing modification would be a more appropriate treatment than a credit, which would presumably be a refundable credit, enabling a double dip, the second dip out of General Revenue as opposed to a dedicated fund for the benefits. Further, it is not clear how the credit would be claimed.
It is unclear what taxes are to be included in the list for ยง23-4D-5. If it is just Severance Tax, solar and wind providers are not subject to Severance Tax.
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov