FISCAL NOTE
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 remove the five year coalbed methane severance tax exemption for businesses, severing coalbed methane for sale, profit or commercial use.
According to our interpretation and based upon available data, passage of this bill would result in a temporary net revenue gain to the General Revenue Fund of as much as $4.0 million. The provisions of this proposed bill would generally end the temporary coalbed methane gas well tax exclusion earlier than the 2011 sunset date in current law. The exclusion of coalbed methane wells from the additional Workers’ Compensation Severance Tax would remain in place.
Additional administrative costs to the State Tax Department associated with this bill would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
4,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
4,000 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation and based upon available data, passage of this bill would result in a temporary net revenue gain to the General Revenue Fund of as much as $4.0 million. Due to the lack of an internal effective date, the removal of the exemption for new coalbed methane production would first become effective for tax years beginning on or after July 1, 2008.
Passage of this bill would remove the five-year severance tax exemption for production from new coal-bed methane wells roughly two years prior to the current expiration year of 2011. The exclusion of coalbed methane gas wells from the additional Workers’ Compensation Severance Tax would remain in place.
Additional administrative costs to the State Tax Department associated with this bill would be due to the printing and promotional expense of notifying taxpayers.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us