FISCAL NOTE
Date Requested: January 19, 2018
Time Requested: 11:46 AM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1734 |
Introduced |
HB4213 |
|
|---|
| CBD Subject: |
|
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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 reduce the severance tax on coal to two percent. The bill makes the effective March 31, 2018.
According to our interpretation, effective March 31, 2018, the Severance Tax rate on the gross value of coal would be reduced from five percent to two percent. This proposed two percent Severance Tax rate would also include the 0.35% additional severance tax on coal for the benefit of counties and municipalities. Passage of this bill would result in a $23.8 million loss to the General Revenue Fund in FY2018 and a $117 million loss to the General Revenue Fund in FY2019 and thereafter. In addition to the loss of State General Revenue Fund, local coal-producing county revenues would decrease by an average of roughly $6 million per year beginning in FY2019.
Additional administrative costs incurred by the State Tax Department would be $35,000 in FY2018 and $10,000 in FY2019.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
35,000 |
10,000 |
0 |
| Personal Services |
10,000 |
10,000 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
25,000 |
0 |
0 |
| 2. Estimated Total Revenues |
-23,800,000 |
-117,000,000 |
-117,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, effective March 31, 2018, the Severance Tax rate on the gross value of coal would be reduced from five percent to two percent. This proposed two percent Severance Tax rate would also include the 0.35% additional severance tax on coal for the benefit of counties and municipalities. Passage of this bill would result in a $23.8 million loss to the General Revenue Fund in FY2018 and a $117 million loss to the General Revenue Fund in FY2019 and thereafter. In addition to the loss of State General Revenue Fund, local coal-producing county revenues would decrease by an average of roughly $6 million per year beginning in FY2019.
Additional administrative costs incurred by the State Tax Department would be $35,000 in FY2018 and $10,000 in FY2019.
Memorandum
The stated purpose of this bill is to reduce the severance tax on coal to two percent. The bill makes the effective March 31, 2018.
Since W.Va. Code ยง11-13A-3(f) already provides for a reduction in the rate of tax to 2% of the gross value of coal produced by underground methods from seams with an average thickness of 37 inches to 45 inches, and the rate is 1% for coal from seams less than 37 inches, this rate reduction would only affect coal produced from surface mines and from underground mines with average seam thickness greater than 45 inches.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov