FISCAL NOTE
Date Requested: January 19, 2026
Time Requested: 12:01 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1364 |
Comm. Sub. |
SB76 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to encourage and incentivize the sales of thermal or steam coal to coal-fired electric generating facilities, which are located in West Virginia and that serve West Virginia residents, by exempting the sale of such coal from the severance tax, thereby providing cheaper electricity to the state’s residents.
According to our interpretation, thermal or steam coal extracted after March 31, 2026, and sold for the purpose of generating electricity to a coal-fired electric generating facility that is physically located within the State of West Virginia would be exempt from State Severance Tax. The tax rate on such coal would decrease from 3.0 percent to 0.35 percent.
In addition, natural gas severed after March 31, 2026, and sold for the purpose of generating electricity to a natural gas-powered electric generating facility that is physically located in this state would be exempt from Severance Tax.
Available data from the U. S. Energy Information Administration shows an average annual level of West Virginia coal purchases by West Virginia electric power producers of generally between 13 million and 15 million tons. Based on average annual West Virginia coal purchases by in-state electric power generators and an average current price of nearly $60 per ton, the anticipated annual cost of the proposed legislation for the steam coal portion would be roughly $27.0 million. The annual cost of the proposed exemption for natural gas would be roughly $3.4 million to the State General Revenue Fund and $400,000 to local governments. Given that the local 5 percent share of net State Coal Severance Tax collections is protected by a minimum statutory amount, a portion of the cost to the State may involve maintenance of the minimum local share. Total cost to the State from this minimum provision could be up to 5 percent of the tax reduction or as much as $1.3 million given current price assumptions.
Passage of this bill would result in a loss to the General Revenue Fund of roughly $7.9 million in FY2026 and $31.7 million per year in FY2027 and subsequent fiscal years. The additional revenue loss to local governments would be roughly $400,000 per year beginning in FY2028.
Additional administrative costs incurred by the State Tax Department would be $18,150 in FY2026.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
18,150 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
1,650 |
0 |
0 |
| Other |
16,500 |
0 |
0 |
| 2. Estimated Total Revenues |
-8,300,000 |
-33,000,000 |
-33,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, thermal or steam coal extracted after March 31, 2026, and sold for the purpose of generating electricity to a coal-fired electric generating facility that is physically located within the State of West Virginia would be exempt from State Severance Tax. The tax rate on such coal would decrease from 3.0 percent to 0.35 percent.
In addition, natural gas severed after March 31, 2026, and sold for the purpose of generating electricity to a natural gas-powered electric generating facility that is physically located in this state would be exempt from Severance Tax.
Available data from the U. S. Energy Information Administration shows an average annual level of West Virginia coal purchases by West Virginia electric power producers of generally between 13 million and 15 million tons. Based on average annual West Virginia coal purchases by in-state electric power generators and an average current price of nearly $60 per ton, the anticipated annual cost of the proposed legislation for the steam coal portion would be roughly $27.0 million. The annual cost of the proposed exemption for natural gas would be roughly $3.4 million to the State General Revenue Fund and $400,000 to local governments. Given that the local 5 percent share of net State Coal Severance Tax collections is protected by a minimum statutory amount, a portion of the cost to the State may involve maintenance of the minimum local share. Total cost to the State from this minimum provision could be up to 5 percent of the tax reduction or as much as $1.3 million given current price assumptions.
Passage of this bill would result in a loss to the General Revenue Fund of roughly $7.9 million in FY2026 and $31.7 million per year in FY2027 and subsequent fiscal years. The additional revenue loss to local governments would be roughly $400,000 per year beginning in FY2028.
Additional administrative costs incurred by the State Tax Department would be $18,150 in FY2026.
Memorandum
The stated purpose of this bill is to encourage and incentivize the sales of thermal or steam coal to coal-fired electric generating facilities, which are located in West Virginia and that serve West Virginia residents, by exempting the sale of such coal from the severance tax, thereby providing cheaper electricity to the state’s residents.
The bill’s language imposing the Severance Tax on sandstone, limestone, and certain health care services is removed, but the section title remains unchanged.
The bill, as written, may have the inadvertent effect of reinstating the Severance Tax on limestone, sandstone, and certain healthcare providers.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov