FISCAL NOTE



FUND(S):

Special Reclamation Fund, General Revenue Fund, Workers' Compensation Debt Reducation Fund, local governements

Sources of Revenue:

General Fund,Other 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 impose a severance tax on surface mining activities with proceeds dedicated to the surface mine reclamation fund. Passage of this bill will increase Special Reclamation Fund revenue by roughly $205 to $210 million. The imposition of the new tax on surface mining is also expected to reduce surface mine production. This will result in a $7 to 12 million annual loss in regular Severance Tax revenue to the General Revenue Fund, a $500,000 to $1,000,000 annual loss in regular Severance Tax revenue to local governments, and a $1.7 to $3.5 million annual loss in Workers’ Compensation Debt Reduction Severance Tax revenue to the Workers’ Compensation Debt Reduction Fund. Additional administrative costs to the State Tax Department associated with this bill would be minimal.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
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):


Passage of this bill would impose an additional Severance Tax of 5 percent on surface-mined coal with the revenue from the tax dedicated to the Special Reclamation Fund. Deposits to the Special Reclamation Fund would increase by roughly $205 to $210 million. The imposition of the new tax on surface mining is also expected to reduce surface mine production. This will result in a $7 to 12 million annual loss in regular Severance Tax revenue to the General Revenue Fund, a $500,000 to $1,000,000 annual loss in regular Severance Tax revenue to local governments, and a $1.7 to $3.5 million annual loss in Workers’ Compensation Debt Reduction Severance Tax revenue to the Workers’ Compensation Debt Reduction Fund. Additional administrative costs to the State Tax Department associated with this bill would be due to printing and promotional expenses.



Memorandum


The stated purpose of this bill is to impose a severance tax on surface mining activities with proceeds dedicated to the surface mine reclamation fund. The bill refers to section §22-3-11 of the Code. That section of the Code makes no mention of the “surface mine reclamation fund.” It is assumed that the bill is intended to refer to the Special Reclamation Fund which does appear in section §22-3-11. The language of the bill should be changed to conform to the remainder of the Code. The bill calls for the new tax to be effective after May 31, 2009. Such a shortened time frame may create problems in the initial administration of the new tax.



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