Date Requested:February 14, 2012
Time Requested:03:36 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R2155 Introduced HB4519
CBD Subject: SPECIAL RECLAMATION TAX ON CLEAN COAL MINED
FUND(S)
Special Reclamation Fund, Special Reclamation Water Trust Fund
Sources of Revenue
Special 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 continue and reimpose the special reclamation tax. It also increases the rate from 14.4 cents to 27.9 cents per ton of clean coal mined.
    
    As written, this bill would increase the Special Reclamation Tax rate effective July 1, 2012. The bill also directs that “Fifteen cents of that amount shall be deposited into the Special Reclamation Water Trust Fund.”
    
    According to our interpretation and assuming the replacement tax rate is twenty-seven and nine-tenths cents {emphasis added}, the increase in the Special Reclamation Tax rate from $0.144 per ton of clean coal mined to $0.279 per ton will result in an increase in the Special Reclamation Tax from roughly $19 million per year to roughly $36 million per year (i.e., an increase of roughly $17 million per year). Due to the July 1, 2012 effective date of the tax rate increase and a one month lag between the taxable activity and remittance of the associated tax, the FY2013 increase would be roughly $16 million. Assuming that the proposed language in the bill is intended to direct an amount of Special Reclamation Tax equivalent to $0.15 per ton to the Special Reclamation Water Trust Fund, the Special Reclamation Water Trust Fund would receive roughly $20 million per year.
    
    Additional administrative costs to the State Tax Department associated with this bill would be minimal.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 40
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 16,000,000 17,000,000
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would increase the Special Reclamation Tax rate effective July 1, 2012. The bill also directs that “Fifteen cents of that amount shall be deposited into the Special Reclamation Water Trust Fund.”
    
    According to our interpretation and assuming the replacement tax rate is twenty-seven and nine-tenths cents {emphasis added}, the increase in the Special Reclamation Tax rate from $0.144 per ton of clean coal mined to $0.279 per ton will result in an increase in the Special Reclamation Tax from roughly $19 million per year to roughly $36 million per year (i.e., an increase of roughly $17 million per year). Due to the July 1, 2012 effective date of the tax rate increase and a one month lag between the taxable activity and remittance of the associated tax, the FY2013 increase would be roughly $16 million. Assuming that the proposed language in the bill is intended to direct an amount of Special Reclamation Tax equivalent to $0.15 per ton to the Special Reclamation Water Trust Fund, the Special Reclamation Water Trust Fund would receive roughly $20 million per year.
    
    Additional administrative costs to the State Tax Department associated with this bill would be minimal.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to continue and reimpose the special reclamation tax. It also increases the rate from 14.4 cents to 27.9 cents per ton of clean coal mined.
    
    As written, the bill uses the strike-through and underline convention to replace 2009 with 2012 as in “For tax periods commencing on and after July 1, 2009 2012, . . .” If the bill is passed before July 1, 2012, it could be interpreted as eliminating the tax from the date of passage to July 1, 2012. The use of a proviso statement for the rate change would likely eliminate possible different interpretations.
    
    The bill also uses the uses the strike-through and underline convention to make a change as in “tax of fourteen and four-tenths cents twenty-seven and nine-tenths per ton of clean coal mine.” As written, the replacement tax rate does specify the units (e.g., cents) that are associated with twenty-seven and nine-tenths.