Date Requested:February 25, 2011
Time Requested:02:59 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2222 Comm. Sub. SB248
CBD Subject: COAL SLURRY DISPOSAL
FUND(S)
General Revenue Fund
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 prohibit new permits for the underground injection of coal slurry until DEP and DHHR agree that this method of disposal is not harmful to public health; and create a tax incentive program for development of alternative technologies for management and disposal of coal slurry.
    
    As written, this bill would create a tax credit for investment in alternative technologies which eliminate or reduce the generation of coal slurry or which eliminate existing coal slurry disposal sites. The tax credit, in an amount equal to the investment, would be available to reduce the Taxpayer’s Corporation Net Income Tax by up to 50 percent. The bill also provides that the State Tax Commissioner would propose Legislative Rules regarding the applicability and method of claiming the credit. The tax credit would be allowed for tax years beginning on or after July 1, 2011. The bill would prohibit the issuance of new water pollution control permits for the underground injection of coal slurry. The prohibition on new permits would remain in place until the Department of Environmental Protection (DEP) and the Department of Health and Human Resources (DHHR) mutually agree that the disposal of coal slurry by underground injection is not harmful to public health. And, DEP and DHHR would be required to begin a joint study within 6 months from the effective date of the proposal and would be required to complete the report no later than one year from the effective date.
    
    The State Tax Department is unable to accurately determine the potential revenue impact of the tax credit proposed by this bill, however, the potential reduction in the General Revenue Fund could be substantial.
    
    Assuming that all Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, if the State Tax Department is required to verify the amount of eligible credit, additional administrative costs to the State Tax Department could be significant. The Department of Environmental Protection and the Department of Health and Human Resources may incur additional administrative costs associated with passage of this bill.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
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 create a tax credit for investment in alternative technologies which eliminate or reduce the generation of coal slurry or which eliminate existing coal slurry disposal sites. The tax credit, in an amount equal to the investment, would be available to reduce the Taxpayer’s Corporation Net Income Tax by up to 50 percent. The bill also provides that the State Tax Commissioner would propose Legislative Rules regarding the applicability and method of claiming the credit. The tax credit would be allowed for tax years beginning on or after July 1, 2011. The bill would prohibit the issuance of new water pollution control permits for the underground injection of coal slurry. The prohibition on new permits would remain in place until the Department of Environmental Protection (DEP) and the Department of Health and Human Resources (DHHR) mutually agree that the disposal of coal slurry by underground injection is not harmful to public health. And, DEP and DHHR would be required to begin a joint study within 6 months from the effective date of the proposal and would be required to complete the report no later than one year from the effective date.
    
    The State Tax Department is unable to accurately determine the potential revenue impact of the tax credit proposed by this bill, however, the potential reduction in the General Revenue Fund could be substantial.
    
    Assuming that all Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, if the State Tax Department is required to verify the amount of eligible credit, additional administrative costs to the State Tax Department could be significant. The Department of Environmental Protection and the Department of Health and Human Resources may incur additional administrative costs associated with passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to prohibit new permits or modifications and renewals of existing permits for the underground injection of coal slurry; and create a tax incentive program for development of alternative technologies for management and disposal of coal slurry.
    
    Although the bill provides that the State Tax Commissioner would propose Legislative Rules regarding the applicability and method of claiming the credit, the lack of Legislative guidance in clarifying acceptable alternative technologies, qualifying investment, and other provisions may result in many differences in interpretation that would increase administrative and trial court activity.