Date Requested:March 03, 2008
Time Requested:01:59 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2008R2362 Comm. Sub. SB751
CBD Subject: Relating to Surface Coal Mining and Reclamation Act
FUND(S)
Special Reclamation Fund, Special Reclamation Water Trust Fund
Sources of Revenue
Special Fund
Legislation creates:
A New Fund

Fiscal Note Summary

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

    The stated purpose of this bill is to modify the Surface Coal Mining and Reclamation Act by implementing the recommendations of the secretary, in consultation with the Special Reclamation Advisory Council and supported by academic and actuarial findings, to provide for the continued fiscal viability of the Special Reclamation Fund and to ensure that, as the coal mining industry matures, adequate funds are nonetheless reserved in trust to reclaim and restore water treatment systems on former mine sites where the reclamation bond has been forfeited.
    
    As written this bill would create the Special Reclamation Water Trust Fund for the purpose of assuring a reliable source of capital to reclaim and restore water treatment systems on forfeited sites. The bill would also increase the Special Reclamation Tax from $0.07 per ton of clean coal mined to $0.074 per ton for the July 1, 2008 through June 30, 2009 period. Also, according to our interpretation, the bill would re-institute an additional tax of $0.07 per ton.
    
    According to our interpretation, mined or severed coal would be subject to a rate of $0.144 per ton ($0.074 per ton from the Special Reclamation Tax and $0.07 per ton from the additional tax) for the period from July 1, 2008 through June 30, 2009 and thereafter, subject to annual review by the Legislature, the coal would be subject to a rate of $0.07 per ton attributable to the additional tax. The combined tax rate of $0.144 per ton will yield roughly $10.7 million in additional revenue. Since the due date for the tax returns for the Special Reclamation Tax is due on the end of the month following the month the taxable activity occurred, roughly $9.8 million of the additional revenue will be collected during Fiscal year 2009, while the remaining $0.9 million will be collected during Fiscal Year 2010. The additional revenue is to be allocated by the Secretary of the Department of Environmental Protection to the Special Reclamation Fund and Special Reclamation Water Trust Fund.
    
    Passage of this bill will result in an increase in administrative costs for the State Tax Department of roughly $10,000 in Fiscal Year 2008.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 10,000 0
Personal Services 0 0 0
Current Expenses 0 10,000 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 10,700,000 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would modify the Surface Coal Mining and Reclamation Act by implementing the recommendations of the secretary, in consultation with the Special Reclamation Advisory Council and supported by academic and actuarial findings, to provide for the continued fiscal viability of the Special Reclamation Fund and to ensure that, as the coal mining industry matures, adequate funds are nonetheless reserved in trust to reclaim and restore water treatment systems on former mine sites where the reclamation bond has been forfeited.
    
    As written this bill would create the Special Reclamation Water Trust Fund for the purpose of assuring a reliable source of capital to reclaim and restore water treatment systems on forfeited sites. The bill would also increase the Special Reclamation Tax from $0.07 per ton of clean coal mined to $0.074 per ton for the July 1, 2008 through June 30, 2009 period. Also, according to our interpretation, the bill would re-institute an additional tax of $0.07 per ton.
    
    According to our interpretation, mined or severed coal would be subject to a rate of $0.144 per ton ($0.074 per ton from the Special Reclamation Tax and $0.07 per ton from the additional tax) for the period from July 1, 2008 through June 30, 2009 and thereafter, subject to annual review by the Legislature, the coal would be subject to a rate of $0.07 per ton attributable to the additional tax. The combined tax rate of $0.144 per ton will yield roughly $10.7 million in additional revenue. Since the due date for the tax returns for the Special Reclamation Tax is due on the end of the month following the month the taxable activity occurred, roughly $9.8 million of the additional revenue will be collected during Fiscal year 2009, while the remaining $0.9 million will be collected during Fiscal Year 2010. The additional revenue is to be allocated by the Secretary of the Department of Environmental Protection to the Special Reclamation Fund and Special Reclamation Water Trust Fund.
    
    Passage of this bill will result in an increase in administrative costs for the State Tax Department of roughly $10,000 in Fiscal Year 2008. The increased administrative costs would be for the printing and mailing of tax returns and other information to notify taxpayers of the tax rate change.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to modify the Surface Coal Mining and Reclamation Act by implementing the recommendations of the secretary, in consultation with the Special Reclamation Advisory Council and supported by academic and actuarial findings, to provide for the continued fiscal viability of the Special Reclamation Fund and to ensure that, as the coal mining industry matures, adequate funds are nonetheless reserved in trust to reclaim and restore water treatment systems on former mine sites where the reclamation bond has been forfeited.
    
    The bill uses strike-throughs and insertions to make the proposed changes in the tax rate. However, as revised, the rates may by subject to different interpretation then intended.