Date Requested:January 26, 2010
Time Requested:03:37 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2010R1021 Introduced HB4177
CBD Subject: 5% Coal Severance Tax to County of Origin
FUND(S)
General Revenue Fund, County Severance Revenue Fund
Sources of Revenue
General Fund,Other Fund County Severance Revenue
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 dedicate five percent of the coal severance tax to the counties where the coal was located at time it was removed from the ground, upon which the coal severance tax is based. It provides that the five percent will go to the county commissions, and provides specific uses for the money.
    
    As written, this bill would require that 5 percent of the Severance Tax on coal be dedicated for the benefit of counties from which the tax was generated. The dedicated revenue is to be distributed by the State Treasurer to the various counties in which the coal upon which “this additional tax” is imposed was located at the time it was removed for the ground. The money is to be distributed to the county commissions and may only be used for economic development, infrastructure, job creation, and road repair. The bill also provides that the moneys resulting from the 5 percent calculation are to be deposited into the “County Severance Revenue Fund,” as established, and that the moneys in the fund are to be distributed to the respective counties entitled to the money at the discretion of the Legislature.
    
    According to our interpretation and assuming that the bill does not create an additional tax, passage of this bill will not result in any change in total revenue, but a reallocation of revenue. While the County Severance Revenue Fund will generally receive between $15 million and $20 million per year, the General Revenue Fund would be reduced by nearly the same amount.
    
    As written, the bill requires that the moneys dedicated by the proposal are to be distributed to the respective counties entitled to the money. If the distribution of the dedicated revenue is determined via the same method as the distribution specified in West Virginia Code §11-13A-6, additional administrative costs to the State Tax Department would be minimal. However, if some other revenue distribution methodology is required, additional administrative costs to the State Tax Department could be substantial.
    
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    As written, this bill would require that 5 percent of the Severance Tax on coal be dedicated for the benefit of counties from which the tax was generated. The dedicated revenue is to be distributed by the State Treasurer to the various counties in which the coal upon which “this additional tax” is imposed was located at the time it was removed for the ground. The money is to be distributed to the county commissions and may only be used for economic development, infrastructure, job creation, and road repair. The bill also provides that the moneys resulting from the 5 percent calculation are to be deposited into the “County Severance Revenue Fund,” as established, and that the moneys in the fund are to be distributed to the respective counties entitled to the money at the discretion of the Legislature.
    
    According to our interpretation and assuming that the bill does not create an additional tax, passage of this bill will not result in any change in total revenue, but a reallocation of revenue. While the County Severance Revenue Fund will generally receive between $15 million and $20 million per year, the General Revenue Fund would be reduced by nearly the same amount.
    
    As written, the bill requires that the moneys dedicated by the proposal are to be distributed to the respective counties entitled to the money. If the distribution of the dedicated revenue is determined via the same method as the distribution specified in West Virginia Code §11-13A-6, additional administrative costs to the State Tax Department would be minimal. However, if some other revenue distribution methodology is required, additional administrative costs to the State Tax Department could be substantial.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to dedicate five percent of the coal severance tax to the counties where the coal was located at time it was removed from the ground, upon which the coal severance tax is based. It provides that the five percent will go to the county commissions, and provides specific uses for the money.
    
    The bill as written uses the phrase “this additional tax” in one reference to the intended revenue. Our interpretation is that rather than an additional tax, the bill reallocates the current tax. The “additional tax” reference could lead to a different interpretation than intended.
    
    The bill also provides that the money is to be distributed to the county commissions and may only be used for economic development, infrastructure, job creation, and road repair. However, the bill does not provide definitions of these terms.