H. B. 2790
(By Delegates Riggs and Everson)
[Introduced March 31, 1993; referred to the
Committee on Finance.]
A BILL to amend article thirteen-a, chapter eleven of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
six-a, relating to the tax on the extraction of oil and gas;
dedication of seventy-five percent of the tax for benefit of
counties and municipalities; distribution of major portion
of the tax to oil and gas producing counties; distribution
of minor portion of the tax to all counties and
municipalities; reports, rules and regulations; creation of
special funds in office of state treasurer; method and
formula for distribution of the tax; expenditure of funds by
counties and municipalities for public purposes; creating
special funds in counties and municipalities; and requiring
special county and municipal budgets and reports thereon.
Be it enacted by the Legislature of West Virginia:
That article thirteen-a, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, beamended by adding thereto a new section, designated section six-
a, to read as follows:
ARTICLE 13A. SEVERANCE TAXES.
§11-13A-6a. Tax on the severance, extraction and production of
oil and gas; dedication of tax for benefit of counties and
municipalities; distribution of major portion of the tax to
oil and gas producing counties; distribution of minor
portion of the tax to all counties and municipalities;
reports; rules; creation of special funds in office of state
treasurer; method and formulas for distribution of the tax;
expenditure of funds by counties and municipalities for
public purposes; creating special funds in counties and
municipalities; and requiring special county and municipal
budgets and reports thereon.
(a) Fifty percent of the net proceeds of the tax on oil and
gas imposed pursuant to the provisions of section three of this
article shall, after appropriation thereof by the Legislature, be
distributed by the state treasurer in the manner hereinafter
specified, to the various counties of this state in which the oil
and gas was located at the time it was extracted from the ground.
Those counties are hereinafter in this section referred to as the
"oil and gas producing counties." Twenty-five percent of the net
proceeds of this tax on oil and gas shall be distributed, after
appropriation, among all the counties and municipalities of this
state in the manner hereinafter specified.
(b) This tax on oil and gas shall be due and payable,reported and remitted as elsewhere provided in this article for
the tax imposed by said section three of this article, and all of
the enforcement and other provisions of this article shall apply
to such additional tax. The tax commissioner is hereby granted
plenary power and authority to promulgate reasonable rules
requiring the furnishing by producers of such additional
information as may be necessary to compute the allocation
required under the provisions of subsection (e) of this section.
The tax commissioner is also hereby granted plenary power and
authority to promulgate such other reasonable rules as may be
necessary to implement the provisions of this section.
(c) In order to provide a procedure for the distribution of
fifty percent of the net proceeds of the tax on oil and gas to
such oil and gas producing counties, there is hereby created in
the state treasurer's office a special fund to be known as the
"oil and gas revenue fund"; and in order to provide a procedure
for the distribution of twenty-five percent of the net proceeds
of the tax on oil and gas to all counties and municipalities of
the state, without regard to oil and gas having been produced
therein, there is also hereby created in the state treasurer's
office a special fund to be known as the "all counties and
municipalities revenue fund."
Fifty percent of the net proceeds of the tax on oil and gas
shall be deposited in the "county oil and gas revenue fund" and
twenty-five percent of the net proceeds shall be deposited in the
"all counties and municipalities revenue fund," from time totime, as such proceeds are received by the tax commissioner. The
moneys in such funds shall, after appropriation thereof by the
Legislature, be distributed to the respective counties and
municipalities entitled thereto in the manner set forth in
subsection (d) of this section.
(d) The moneys in the "county oil and gas revenue fund" and
the moneys in the "all counties and municipalities revenue fund"
shall be allocated among and distributed quarterly to the
counties and municipalities entitled thereto by the state
treasurer in the manner hereinafter specified. On or before each
distribution date, the state treasurer shall determine the total
amount of moneys in each fund which will be available for
distribution to the respective counties and municipalities
entitled thereto on that distribution date. The amount to which
an oil and gas county is entitled from the "county oil and gas
revenue fund" shall be determined in accordance with subsection
(e) of this section, and the amount to which every county and
municipality shall be entitled from the "all counties and
municipalities revenue fund" shall be determined in accordance
with subsection (c) of this section. After determining as set
forth in subsection (e) and subsection (f) of this section the
amount each county and municipality is entitled to receive from
the respective fund or funds, a warrant of the state auditor for
the sum due to such county or municipality shall issue and a
check drawn thereon making payment of such sum shall thereafter
be distributed to such county or municipality.
(e) The amount to which an oil and gas-producing county is
entitled from the "county oil and gas revenue fund" shall be
determined by:
(1) Dividing the total amount of moneys in such fund then
available for distribution by the total volume of cubic feet of
gas, or barrels of oil extracted in this state during the
preceding quarter; and
(2) Multiplying the quotient thus obtained by the number of
cubic feet of gas and barrels of oil taken from the ground in
such county during the preceding quarter.
(f) The amount to which each county and municipality shall
be entitled from the "all counties and municipalities revenue
fund" shall be determined in accordance with the provisions of
this subsection. For purposes of this subsection "population"
shall mean the population as determined by the most recent
decennial census taken under the authority of the United States:
(1) The treasurer shall first apportion the total amount of
moneys available in the "all counties and municipalities revenue
fund" by multiplying the total amount in such fund by the
percentage which the population of each county bears to the total
population of the state. The amount thus apportioned for each
county shall be the county's "base share."
(2) Each county's "base share" shall then be subdivided into
two portions. One portion shall be determined by multiplying the
"base share" by that percentage which the total population of all
unincorporated areas within the county bears to the totalpopulation of the county, and the other portion shall be
determined by multiplying the "base share" by that percentage
which the total population of all municipalities within the
county bears to the total population of the county. The former
portion shall be paid to the county and the latter portion shall
be the "municipalities' portion" of the county's "base share."
The percentage of such latter portion to which each municipality
in the county is entitled shall be determined by multiplying the
total of such latter portion by the percentage which the
population of each municipality within the county bears the total
population of all municipalities within the county.
(g) All counties and municipalities shall create an "oil and
gas severance tax revenue fund" which shall be the depository for
moneys distributed to any county or municipality under the
provisions of this section, from either or both special funds.
Moneys in such "oil and gas severance tax revenue funds," in
compliance with subsection (i), may be expended by the county
commission or governing body of the municipality for such public
purposes as the county commission or governing body shall
determine to be in the best interest of the people of its
respective county or municipality: Provided, That in counties
with population in excess of two hundred thousand at least fifty
percent of such funds received from the county oil and gas
revenue fund shall be apportioned to, and expended within, the
oil and gas producing area or areas of the county, said oil and
gas areas of each county to be determined generally by the statetax commissioner: Provided, however, That a line item budgeted
amount from the current levy estimated for a county shall be
funded at one hundred percent of the preceding year's expenditure
from the county general fund prior to the use of oil and gas
severance tax revenue fund moneys for the same general purpose:
Provided further, That said oil and gas severance tax revenue
fund moneys shall not be budgeted for personal services in an
amount to exceed one fourth of the total funds available in such
fund.
(h) On or before March twenty-eighth, one thousand nine
hundred ninety-four and each twenty-eighth day of March
thereafter, each county commission or governing body of a
municipality receiving such revenue shall submit to the tax
commissioner on forms provided by the tax commissioner, a special
budget, detailing how such revenue is to be spent during the
subsequent fiscal year. Such budget shall be followed in
expending such revenue unless a subsequent budget is approved by
the state tax commissioner. All unexpended balances remaining in
said special fund at the close of a fiscal year shall be
reappropriated to the budget for the subsequent fiscal year.
Such reappropriation shall be entered as an amendment to the new
budget and submitted to the tax commissioner on or before the
fifteenth day of July, of the current budget year.
(i) On or before the fifteenth day of December, one thousand
nine hundred ninety-four and each fifteenth day of December,
thereafter, the tax commissioner shall deliver to the clerk ofthe Senate and clerk of the House of Delegates a consolidated
report of the special budgets, created by subsection (h) of this
section, for all county commissions and municipalities as of the
fifteenth day of July of the current year.
(j) The state tax commissioner shall retain for the benefit
of the state from the taxes on oil and gas the amount of thirty-
five thousand dollars annually as a fee for the administration of
such tax by the tax commissioner.
NOTE: The purpose of this bill is to provide that 50% of
the severance tax on oil and gas inure to the direct benefit of
the producing counties and municipalities; 25% of the severance
tax on oil and gas inure to the benefit of all nonproducing
counties and municipalities.
This section is new; therefore, strike-throughs and
underscoring have been omitted.