FISCAL NOTE
Date Requested: January 12, 2024
Time Requested: 01:48 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1431 |
Introduced |
SB212 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
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 coal severance tax shall go to the respective county that produced the coal.
According to our interpretation, passage of this bill would transfer all State coal severance tax collections to the county commissions in counties where coal is produced for any coal sales occurring on or after July 1, 2024. The fiscal consequences of this proposed change will vary significantly from year to year based on the fortunes of the coal industry. However, based on the quarterly coal sharing tax distributions for the past four quarters, the State general revenue fund would have lost roughly $265 million and county commissions where coal is produced (i.e. 22 in the past year) would have collectively gained $265 million. In addition to various State general revenue fund programs, a portion of the State coal severance tax currently funds infrastructure bonds.
Over the past year, coal sales occurred in only 22 out of the State’s 55 counties with just 6 counties accounting for nearly 71 percent of all production. Over the past couple of years, county governments benefitted from higher energy prices with significant increases in both local severance tax distributions and local property tax revenues associated with natural resource production. Total county commission severance tax distributions from all severance sources more than doubled in the past five years from $40.9 million in FY2019 to a projection of nearly $93.4 million in FY2024. The provisions of this bill would further enhance county commission severance tax revenues for roughly 22 county commissions in the State. Based on activity over the past year, Marshall County would receive the greatest benefit increase of $59 million, followed by Wetzel County ($42 million), Logan County ($28 million), Raleigh County ($20.5 million), Wyoming County ($19 million), and Ohio County ($18 million).
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
10,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
10,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would transfer all State coal severance tax collections to the county commissions in counties where coal is produced for any coal sales occurring on or after July 1, 2024. The fiscal consequences of this proposed change will vary significantly from year to year based on the fortunes of the coal industry. However, based on the quarterly coal sharing tax distributions for the past four quarters, the State general revenue fund would have lost roughly $265 million and county commissions where coal is produced (i.e. 22 in the past year) would have collectively gained $265 million. In addition to various State general revenue fund programs, a portion of the State coal severance tax currently funds infrastructure bonds.
Over the past year, coal sales occurred in only 22 out of the State’s 55 counties with just 6 counties accounting for nearly 71 percent of all production. Over the past couple of years, county governments benefitted from higher energy prices with significant increases in both local severance tax distributions and local property tax revenues associated with natural resource production. Total county commission severance tax distributions from all severance sources more than doubled in the past five years from $40.9 million in FY2019 to a projection of nearly $93.4 million in FY2024. The provisions of this bill would further enhance county commission severance tax revenues for roughly 22 county commissions in the State. Based on activity over the past year, Marshall County would receive the greatest benefit increase of $59 million, followed by Wetzel County ($42 million), Logan County ($28 million), Raleigh County ($20.5 million), Wyoming County ($19 million), and Ohio County ($18 million).
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024.
Memorandum
The stated purpose of this bill is to provide that the coal severance tax shall go to the respective county that produced the coal.
The proposed bill may run contrary to the State’s equal protection clause. The dedication in this bill may be arbitrary or discriminatory. For example, it is unclear why such a dedication is not similarly made for natural gas and oil producing counties or counties that produce any other natural resource.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov