Date Requested: February 11, 2015
Time Requested: 12:19 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2492 Comm. Sub. SB339
CBD Subject: Tax


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 eliminate certain severance taxes on coal, natural gas and timber which are deposited into the Workers’ Compensation Debt Reduction Fund, and also eliminate the deposit of a percentage of proceeds from racetrack video lottery net terminal income into the Workers’ Compensation Debt Reduction Fund and divert this percentage of such proceeds back to where they were deposited under statute prior to the creation of the Workers’ Compensation Debt Reduction Fund.
    
    The bill eliminates the extra taxes on coal, natural gas, and timber that funds the Workers’ Compensation Debt Reduction Fund. The bill also eliminates reporting requirements certifying that the Workers’ Compensation Debt Reduction Fund has been paid or provided for in its entirety. Eleven million dollars from the racetrack video lottery net terminal income will be redirected to payment of regular purses each year, and $101 million and $110 million in revenue from additional coal, natural gas, and timber severance taxes will be eliminated in FY2016 and FY2017 respectively. According to our interpretation, the bill would reduce the Workers’ Compensation Debt Reduction Fund by an amount of $112 million in FY2016 and potentially up to $121 million in each subsequent fiscal year in which an unfunded Workers’ Compensation Debt might still exist. According to the Office of the Insurance Commissioner, the Workers’ Compensation Debt should be paid off by the end of calendar year 2016. This bill would delay that payoff date, thereby extending other temporary revenue dedications and temporary taxes on employers and others for a longer period of time.
    
    Additional administrative costs to the Tax Department would be $60,000 in FY2015.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 60,000 0 0
Personal Services 60,000 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 -112,000,000 -121,000,000


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


    The bill eliminates the extra taxes on coal, natural gas, and timber that funds the Workers’ Compensation Debt Reduction Fund. The bill also eliminates reporting requirements certifying that the Workers’ Compensation Debt Reduction Fund has been paid or provided for in its entirety. Eleven million dollars from the racetrack video lottery net terminal income will be redirected to payment of regular purses each year, and $101 million and $110 million in revenue from additional coal, natural gas, and timber severance taxes will be eliminated in FY2016 and FY2017 respectively. According to our interpretation, the bill would reduce the Workers’ Compensation Debt Reduction Fund by an amount of $112 million in FY2016 and potentially up to $121 million in each subsequent fiscal year in which an unfunded Workers’ Compensation Debt might still exist. According to the Office of the Insurance Commissioner, the Workers’ Compensation Debt should be paid off by the end of calendar year 2016. This bill would delay that payoff date, thereby extending other temporary revenue dedications and temporary taxes on employers and others for a longer period of time.
    
    Additional administrative costs to the Tax Department would be $60,000 in FY2015.
    



Memorandum


    The stated purpose of this bill is to eliminate certain severance taxes on coal, natural gas and timber which are deposited into the Workers’ Compensation Debt Reduction Fund, and also eliminate the deposit of a percentage of proceeds from racetrack video lottery net terminal income into the Workers’ Compensation Debt Reduction Fund and divert this percentage of such proceeds back to where they were deposited under statute prior to the creation of the Workers’ Compensation Debt Reduction Fund.
    
    It should be noted that the failure to include in the committee substitute the repeal of section 4-a of Article 13-v, which provides that “coalbed methane and methane produced from or by a coalbed methane is taxable as natural gas for purposes of taxes imposed by [article 13-v]” could be interpreted as and providing for the continued ability to tax “coalbed methane” through section 4-a.
    
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov