FISCAL NOTE
FUND(S):
General Revenue Fund, Workers' Compensation Debt Reduction Fund, local governments
Sources of Revenue:
General Fund,Other Fund see above
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 eliminate the exemption from regular severance tax for production and severance of coalbed methane, and to impose the regular severance tax and the Workers’ Compensation Debt Reduction severance tax on coalbed methane as natural gas..
According to our interpretation and based upon available data, passage of this bill would result in an annual net gain in regular natural gas severance tax revenues of approximately $5.0 million to $10.0 million and an annual net gain to the Workers’ Compensation Debt Reduction Fund of approximately $800,000 to $1.1 million. Ten percent of the regular natural gas severance tax revenue would be distributed back to counties and municipalities and the remaining ninety percent would benefit the State General Revenue Fund.
Additional administrative costs to the State Tax Department associated with this bill would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
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 remove the five-year severance tax exemption for production from new coal-bed methane wells and apply the Workers’ Compensation Debt Reduction severance tax on coalbed methane as natural gas. The elimination of the exemption would result in an annual net gain in regular natural gas severance tax revenue of approximately $5.0 million to $10.0 million for tax years beginning on or after January 1, 2008. Ten percent of the regular natural gas severance tax revenue would be distributed back to counties and municipalities and the remaining ninety percent would benefit the State General Revenue Fund.
Applying the Workers’ Compensation Debt Reduction severance tax on coalbed methane as natural gas results in an annual net gain to the Workers’ Compensation Debt Reduction fund of approximately $800,000 to $1.1 million.
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