FISCAL NOTE
Date Requested: February 10, 2026
Time Requested: 03:11 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4026 |
Introduced |
HB5398 |
|
|---|
| CBD Subject: |
Natural Resources |
|---|
|
FUND(S):
Oil and Gas Abandoned Well Plugging Fund
Sources of Revenue:
Other Fund Oil and Gas Abandoned Well Plugging 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 allow for the receipt of the oil and gas severance tax into the Oil and Gas Abandoned Well Plugging Fund if there is not more than $6 million in unencumbered funds by September 30 of each year.
The provisions of this bill would change the criteria for the annual determination of the severance tax rate for mid-volume vertical natural gas and oil wells with proceeds dedicated to the Oil and Gas Abandoned Well Plugging Fund (the Fund). Under current Law, if the balance of the Fund equals or exceeds $6 million as of June 1st of each year, the tax rate for the following tax year beginning on or after January 1st would be reduced from 2.5% to 0%. The bill would change the criteria from the amount of balance in the Fund to the amount of unencumbered balance in the Fund. In addition, the date of measurement would move from June 1st to September 30th each year beginning in 2026. This change increases the likelihood that future determined balances on the date of measurement will fall below $6 million with the tax rate for future years being 2.5%. DEP would receive more dedicated funding for plugging abandoned wells over time with greater deposits in the Fund. We are unable to accurately predict the level of additional future funding for the Oil and Gas Abandoned Well Plugging Fund.
Additional administrative costs incurred by the State Tax Department would be $5,500 in FY2027.
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 |
0 |
5,500 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,500 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The provisions of this bill would change the criteria for the annual determination of the severance tax rate for mid-volume vertical natural gas and oil wells with proceeds dedicated to the Oil and Gas Abandoned Well Plugging Fund (the Fund). Under current Law, if the balance of the Fund equals or exceeds $6 million as of June 1st of each year, the tax rate for the following tax year beginning on or after January 1st would be reduced from 2.5% to 0%. The bill would change the criteria from the amount of balance in the Fund to the amount of unencumbered balance in the Fund. In addition, the date of measurement would move from June 1st to September 30th each year beginning in 2026. This change increases the likelihood that future determined balances on the date of measurement will fall below $6 million with the tax rate for future years being 2.5%. DEP would receive more dedicated funding for plugging abandoned wells over time with greater deposits in the Fund. We are unable to accurately predict the level of additional future funding for the Oil and Gas Abandoned Well Plugging Fund. In February 2026, the balance in the Oil and Gas Abandoned Well Plugging Fund is $9.6 million.
Additional administrative costs incurred by the State Tax Department would be $5,500 in FY2027.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov