Date Requested:March 18, 2013
Time Requested:03:33 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1320 Introduced HB2352
CBD Subject: BOND FORFEITURE SITES
FUND(S)
Special Reclamation Fund, Special Reclamation Water Trust Fund
Sources of Revenue
Special Fund
Legislation creates:
A New Program

Fiscal Note Summary

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

     The stated purpose of this bill is to clarify that a mine operator's obligations under the West Virginia Water Pollution Control Act do not pass to the West Virginia Department of Environmental Protection at bond forfeiture sites where the West Virginia Department of Environmental Protection completes reclamation. The bill also clarifies that the West Virginia Department of Environmental Protection's reclamation activities at bond forfeiture sites shall be considered construction activities. Finally, the bill establishes a tax incentive for mine operators who agree to reclaim bond forfeiture sites.
    
     It is expected that the Department of Environmental Protection will submit a Fiscal Note on the bill’s proposed provisions under their purview. According to the interpretation of the State Tax Department, the bill would create a new tax credit for any mine operator who performs reclamation or remediation at a bond forfeiture site which otherwise would have been reclaimed using funds from the Special Reclamation Fund or Special Reclamation Water Trust Fund. The bill provides that the tax credit would be available to offset the Special Reclamation Tax. Additionally, the bill provides that the tax credit would be equal to the amount the State Tax Commissioner “determines, based upon the project costs, as shown in the records of the secretary, that would have been spent from the Special Reclamation Fund or Special Reclamation Water Trust Fund to accomplish the reclamation or remediation performed by the mine operator, including expenditures for water treatment.”
    
     The State Tax Department does not have access to information on project costs that would be incurred to accomplish the reclamation or remediation at bond forfeiture sites, therefore, we are unable to accurately estimate the potential revenue reduction in the Special Reclamation Fund attributable to the proposed tax credit.
    
     Additional costs for the State Tax Department associated with administering the tax credit provisions of this bill would be roughly $100,000 in FY2014 and roughly $50,000 per year thereafter. Potential tax credit claimants would incur additional compliance costs related to the Special Reclamation Tax and the new tax credit. The Department of Environmental Protection may incur additional administrative costs due to passage of this bill.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 100,000 50,000
Personal Services 0 50,000 50,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 10,000 0
Other 0 40,000 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     It is expected that the Department of Environmental Protection will submit a Fiscal Note on the bill’s proposed provisions under their purview. According to the interpretation of the State Tax Department, the bill would create a new tax credit for any mine operator who performs reclamation or remediation at a bond forfeiture site which otherwise would have been reclaimed using funds from the Special Reclamation Fund or Special Reclamation Water Trust Fund. The bill provides that the tax credit would be available to offset the Special Reclamation Tax. Additionally, the bill provides that the tax credit would be equal to the amount the State Tax Commissioner “determines, based upon the project costs, as shown in the records of the secretary, that would have been spent from the Special Reclamation Fund or Special Reclamation Water Trust Fund to accomplish the reclamation or remediation performed by the mine operator, including expenditures for water treatment.”
    
     The State Tax Department does not have access to information on project costs that would be incurred to accomplish the reclamation or remediation at bond forfeiture sites, therefore, we are unable to accurately estimate the potential revenue reduction in the Special Reclamation Fund attributable to the proposed tax credit.
    
     Additional costs for the State Tax Department associated with administering the tax credit provisions of this bill would be roughly $100,000 in FY2014 and roughly $50,000 per year thereafter. The State Tax Department’s additional costs include expenditures for form redesign to incorporate the new tax credit,, additional programming costs, the development of rules and processes for administration of the new tax credit and the hiring of additional personnel to monitor and certify applications for the new tax credit. Potential tax credit claimants would incur additional compliance costs related to the Special Reclamation Tax and the new tax credit. The Department of Environmental Protection may incur additional administrative costs due to passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchpw
Email Address:
Roger.D.Cox@wv.gov