Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

The stated purpose of this bill is to remove the five year coalbed methane severance tax exemption for businesses, severing coalbed methane for sale, profit or commercial use. According to our interpretation and based upon available data, passage of this bill would result in an annual net gain to the General Revenue Fund of approximately $5.0 million to $10.0 million. Additional administrative costs to the State Tax Department associated with this bill would be minimal.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2007 Increase/Decrease (use"-")	2008 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	4,000	0	0
Personal Services	0	0	0
Current Expenses	4,000	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	0	0

Explanation of above estimates (including long-range effect):

According to our interpretation and based upon available data, passage of this bill would result in an annual net gain to the General Revenue Fund of approximately $5.0 million to $10.0 million. Due to the lack of an internal effective date, the removal of the exemption for new coalbed methane production would first become effective for tax years beginning on or after July 1, 2007. Passage of this bill would remove the five-year severance tax exemption for production from new coal-bed methane wells. It is assumed that taxpayers currently qualifying for the exemption would not retain the exemption after passage of the legislation. Additional administrative costs to the State Tax Department associated with this bill would be due to the printing and promotional expense of notifying taxpayers.

Memorandum

Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us