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 provide that the reduced tax rate applies to underground mines producing coal from seams of less than thirty-two inches.
    
    According to our interpretation and based upon available data, passage of this bill as written would result in a reduction in the General Revenue Fund of less than $100,000 per year beginning with FY 2006. Due to the lack of an internal effective date, the amendment would apply to tax years beginning on or after 90 days from passage of the bill.
    
    Additional administrative costs to the State Tax Department associated with this bill would be minimal.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
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 -100,000 -100,000


Explanation of above estimates (including long-range effect):


    This bill provides that all coal produced from underground mines with seams of less than thirty-two inches is eligible for the reduced one percent tax rate. Passage of this bill as written would result in a reduction in the General Revenue Fund of less than $100,000 per year beginning with FY 2005. Due to the lack of an internal effective date, the reduced rate would apply to tax years beginning on or after 90 days from passage of the bill.
    
    Additional administrative costs to the State Tax Department associated with this bill would be minimal.



Memorandum


    The stated purpose of this bill is to provide that the reduced tax rate applies to underground mines producing coal from seams of less than thirty-two inches.
    
    The current code already applies a reduced tax rate to some mines producing coal from seams less than thirty-two inches in average thickness, but mines that were producing from applicable veins prior to April 11, 1997 are excluded. Passage of this bill would result in the application of the reduced rate to all mines producing coal from seams less than thirty-two inches in average thickness. The change affects an extremely small number of mines.
    
    In addition, it appears the bill amends the wrong subdivision of Section 11-13A-3(f). Subdivision (f)(1) establishes two different tax rates for underground thin seam coal mines. For seams that are 37" to 45", the tax rate is 2% of the gross value of coal produced; for seams that are less than 37", the tax rate is 1% of the gross value of the coal produced. This subdivision remains unchanged. Also, subdivision (f)(2) is amended so as to state that the reduced rate applies to any underground mine producing coal from seams of less than 32" in thickness. Person submitting Fiscal Note: Mark Muchow
     Email Address: kpetry@tax.state.wv.us