FISCAL NOTE
Date Requested: January 13, 2023
Time Requested: 04:49 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1573 |
Introduced |
SB210 |
|
|---|
| CBD Subject: |
Natural Resources |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
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 provide that the coal severance tax shall go to the respective county that produced the coal.
According to our interpretation, passage of this bill would transfer all State coal severance tax collections to the county commissions in counties where coal is produced for any coal sales occurring on or after July 1, 2023. The fiscal consequences of this proposed change will vary significantly from year to year based on the fortunes of the coal industry. However, based on the quarterly coal sharing tax distributions for the past four quarters, the State general revenue fund would have lost roughly $332.2 million and county commissions where coal is produced (i.e. 23 in the past year) would have collectively gained $332.2 million. In addition to various State general revenue fund programs, a portion of the State coal severance tax currently funds infrastructure bonds.
Over the past year, coal sales occurred in only 23 out of the State’s 55 counties with just 6 counties accounting for 75% of all production. County governments are benefiting from higher energy prices with significant increases in both local severance tax distributions and local property tax revenues associated with natural resource production. Total county commission severance tax distributions from all severance sources more than doubled in the past five years from $39.9 million in FY2018 to a projection of roughly $90 million in FY2023. The provisions of this bill would further enhance county commission severance tax revenues for roughly 23 county commissions in the State. Based on activity over the past year, Marshall County would receive the greatest benefit increase of $89.9 million, followed by Wetzel County ($61.1 million), Logan County ($29.6 million), Wyoming County ($26.4 million), Raleigh County ($22.5 million) and Ohio County ($17.9 million).
Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2023.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
5,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
5,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would transfer all State coal severance tax collections to the county commissions in counties where coal is produced for any coal sales occurring on or after July 1, 2023. The fiscal consequences of this proposed change will vary significantly from year to year based on the fortunes of the coal industry. However, based on the quarterly coal sharing tax distributions for the past four quarters, the State general revenue fund would have lost roughly $332.2 million and county commissions where coal is produced (i.e., 23 in the past year) would have collectively gained $332.2 million. In addition to various State general revenue fund programs, a portion of the State coal severance tax currently funds infrastructure bonds.
Over the past year, coal sales occurred in only 23 out of the State’s 55 counties with just 6 counties accounting for 75% of all production. County governments are benefiting from higher energy prices with significant increases in both local severance tax distributions and local property tax revenues associated with natural resource production. Total county commission severance tax distributions from all severance sources more than doubled in the past five years from $39.9 million in FY2018 to a projection of roughly $90 million in FY2023. The provisions of this bill would further enhance county commission severance tax revenues for roughly 23 county commissions in the State. Based on activity over the past year, Marshall County would receive the greatest benefit increase of $89.9 million, followed by Wetzel County ($61.1
million), Logan County ($29.6 million), Wyoming County ($26.4 million), Raleigh County ($22.5 million) and Ohio County ($17.9 million).
Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2023.
Memorandum
The stated purpose of this bill is to provide that the coal severance tax shall go to the respective county that produced the coal.
This bill does not address conflicting West Virginia Code sections that dedicate some of the Severance Tax on coal to other recipients including the State Future Fund and the County Coal Revenue Fund.
The proposed bill may be violating the Equal Protection Clause of the West Virginia Constitution. This proposed dedication may be arbitrary or discriminatory. For example, it is unclear why such a dedication is not similarly made for natural gas and oil producing counties that produce any other natural resource.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov