This month, Senator Ron Stollings of Boone County and Richard Ojeda of Logan County proposed legislation that would allow severely economically depressed counties to retain 50 percent of the coal severance tax collected in county for economic development and education.
Senate Bill 561 would retain a significant portion of coal severance revenue in coal producing counties, which have been severely impacted by the collapse of the state’s coal economy.
As SB 561 is currently written, to qualify for the adjusted severance revenue a county must have experienced a loss of at least 40 percent in its tax revenue and a loss of one-fifth of its local labor force.
The bill states that this coal severance revenue “shall be allocated to the county commission and county school board in the same ratio as is done with other taxes collected in the county.”
As Senator Stollings recently told the Hub, “If we had done this years ago, we’d still have textbooks in our classrooms.”
This piece of legislation was double referenced to the Senate Energy, Mining and Industry Committee and then the Senate Finance Committee. But it has yet to move since being introduced on March 8.
Currently, coal companies pay a tax of 5 percent of the sale price of coal extracted in West Virginia. For the fiscal year of 2016, this coal severance tax accounted for 6.5 percent of the state’s budget. For fiscal year 2017, it made up 4.5 percent.
There is currently a proposal before the Senate Finance Committee – SB 335 – to reduce the coal severance tax from 5 percent to 2.5 percent.
If SB 561 does not pass out of the Senate Energy, Mining and Industry Committee by this Friday, it’s likely to die in committee.
Ninety five percent of the revenue generated by the coal severance tax is currently attributed to the state’s general revenue fund. The remaining 5 percent of the collected coal severance tax is given back to West Virginia counties and municipalities.
Of this five percent slice, 75 percent is distributed to coal-producing counties based on the tonnage of coal mined in each county, while the remaining 25 percent (of the 5 percent) is divided amongst all counties and municipalities based on population.
Severance taxes are one of the largest sources of revenue to the state’s general revenue fund, behind revenue driven to the fund by the consumer sales tax and the personal income tax. Many southern coal-producing counties in West Virginia rely on severance tax revenue as a primary source of income and the sharp shortfall of severance has led numerous counties to eliminate jobs and necessary programs.
Coal-producing counties include: Barbour, Boone, Fayette, Grant, Greenbrier, Kanawha, Lincoln, Logan, McDowell, Marion, Marshall, Mercer, Mingo, Monongalia, Nicholas,Ohio, Raleigh, Taylor, Upshur, Wyoming.