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Coal Severance Tax Exemption Moves Forward In Senate

According to an attached fiscal note, the measure would cost the state $22 million in tax revenue each year.

A bill to exempt West Virginia coal consumed in-state from severance taxes advanced in the Senate.

The Energy, Industry and Mining Committee approved Senate Bill 168 Thursday.

The bill, SB 168, would exempt West Virginia coal burned by West Virginia power plants from severance tax.

According to an attached fiscal note, the measure would cost the state $22 million in tax revenue each year.

The local government portion of severance tax would not be affected by the bill.

The fiscal note also warned that the bill might run into constitutional issues. A federal appeals court ruled against a similar law in Kentucky.

SB 168 now goes to the Senate Finance Committee.

Coal Industry Wants Legislature's Help To Recruit And Train Miners

Hamilton said Senate Bill 157 could help do that, by funding the Coalfield Community Development Office.

The West Virginia coal industry’s top lobbyist says mine companies are having trouble finding workers, and he’d like lawmakers to help recruit and train them.

Chris Hamilton, president of the West Virginia Coal Association, told members of the Senate Energy, Industry and Mining Committee on Tuesday that West Virginia coal mines could hire several hundred workers, if it could find them.

“You know, we ought to be recruiting people from around the country, bringing them here and providing them land and opportunities within our industrial sector,” he said.

Hamilton said Senate Bill 157 could help do that, by funding the Coalfield Community Development Office. That office has been dormant for at least a decade, Hamilton said.

The state employs about 13,000 full-time mine workers. Coal production has been up in the past year, but the industry has been limited by its ability to find new workers.

The committee approved the bill and sent it to the Finance Committee.

The funds would come from coal severance taxes, which have increased with the demand for coal and higher prices per ton.

Energy Bills Move Forward As Legislature Winds Down Session

State lawmakers wrapped up energy related legislation in the final hours of the session, including a bill to create a Mining Mutual Insurance Company.

The Senate unanimously approved the final version of Senate Bill 1 on Saturday, and it becomes effective immediately when the governor signs it.

SB 1 creates a five-member board to manage at least $50 million in taxpayer funds. Those funds would back mine reclamation bonds.

An audit last year found that the state’s special reclamation fund was not adequate to cover future mine cleanup obligations, potentially exposing the state to hundreds of millions of dollars in liabilities.

Senate President Craig Blair identified SB 1 as one of his top priorities, and in a rare move, he sponsored the bill.

Advanced Batteries

The House sent House Bill 4025 back to the Senate late Saturday with an amendment removed, but the chamber didn’t act on it before the session expired.

The bill would have exempted rare earth minerals mined in the state from severance taxes. Its supporters say that will encourage the development of advanced battery technology for use in electric vehicles and storage batteries for renewable energy.

Carbon Storage

Both chambers finished action earlier this month on House Bill 4491, with the Senate agreeing unanimously to the legislation.

HB 4491 will create a permitting system for underground carbon storage. The system could help carbon-intensive industries, such as power plants, steelmakers and cement companies, meet their carbon-reduction or net-zero goals.

The stored carbon could also be used in the future and meanwhile would not be released into the atmosphere.

Nuclear Power

Senate Bill 4 made it across the finish line and to the governor’s desk last month.

SB 4 repealed the state’s longstanding ban on the construction of new nuclear power facilities. The ban was enacted over concerns about nuclear safety and to protect the state’s coal industry from a competitor.

But times have changed. Gov. Jim Justice, a coal executive, signed the repeal. It will take effect on May 1, 2022.

Mine Safety

A bill to change the state’s mine safety code didn’t get very far.

House Bill 4840 would have made changes that Democrats, many Republicans and the United Mine Workers of America said would have weakened safety.

An intensive lobbying effort by mine workers and their allies effectively sidelined the legislation.

State Revenue Estimates are 'on Target' Halfway through Fiscal Year

West Virginia is on track to meet its budget estimates for this fiscal year.

In a press call with reporters, Revenue Secretary Dave Hardy said the state’s General Revenue Fund is 4.5 percent ahead of where it was this time last year – and overall budget estimates for this fiscal year are, so far, on target.

November saw nearly $300 million in increased revenue bringing the cumulative General Revenue Fund collections to more than $1.6 billion.

“I’m happy,” Hardy said, “I think the revenue projections are good for the people of West Virginia, and there’s certainly, hopefully, we’re beginning to see the making of a trend here, because we are 5/12 of the way through the fiscal year.”

There were some shortfalls in November collections, however – such as severance tax – which taxes coal, oil and natural gas. Severance taxes were down $3.5 million last month, but compared to last year, Hardy notes, it was up 19 percent from November 2016.

Hardy says collections in personal income, consumer sales, and corporate net receipts helped to offset November’s shortfalls.

The State Road Fund saw a big increase from the previous year – over 16 percent above prior year receipts. Hardy says this is due, in large part, to the increase in license plate fees, fuel tax, and a 1 percent sales tax enacted by the West Virginia Legislature.

West Virginia Tax Receipts Up 3.9 Percent from Last Year

West Virginia tax officials say collections of nearly $560 million so far this fiscal year are 3.9 percent higher than last year, though August receipts of almost $307 million were lower than budget estimates.

Treasury Secretary Dave Hardy says the boost in collections is good news for the state two months into its new year.

He says severance taxes from production of coal, natural gas and oil are up 8 percent from the same two months last year, though lower than estimated in August.

That’s attributed to a drop in natural gas prices, which are expected to rebound with cooler weather.

The West Virginia road fund’s $69.2 million collected was higher than the estimate and last August’s receipts from legislated increases in registration fees and gas taxes.

NPR's Berkes Discusses Justice Investigation

Two years ago, an NPR investigation found that Jim Justice was among the top delinquent mine owners in the country, owing millions in federal mine safety fines.

NPR’s Howard Berkes decided to follow up on those findings and see just how far the Justice companies had come. What he found was not just that Justice now owed more money in fines than any other operator in the country, but that he also owed millions in federal, state and local taxes as well.

“Two years ago, his chief operating officer said that Justice would pay off his penalties, that times had been tough in the coal industry, but that he always paid his debts and he would pay these,” Berkes said in an interview with West Virginia Public Broadcasting.

“What we found was instead of that, there was actually a million dollars more in new violations and new delinquencies that had occurred since we first contacted the Justice companies two years ago.”

Those delinquent mine safety fines are not owed at mines located in West Virginia, but Justice is on a payment plan to pay off the debts in other states, like Kentucky.

What Berkes did find in West Virginia, though, was that Justice owes more than $3 million in unpaid severance taxes, the tax paid on coal as it’s mined. Those are the same taxes that West Virginia budget officials say are drastically decreasing with the decline in the coal industry, causing budgetary issues for the state.

“The total is over $3 million for Justice mining companies [in 2013 and 2014],” Berkes said, “and that is about 43 percent of the unpaid severance taxes for all of West Virginia for those years combined.”

Along with the severance taxes owed in West Virginia and delinquent mine safety penalties, Justice mining companies owe nearly $5.4 million in county taxes in Virginia, Kentucky and Tennessee.

Berkes also confirmed that Justice has never paid two of his largest promised charitable contributions, $25 million to the Boy Scouts in West Virginia and $10 million to the Cleveland Clinic in Ohio.

“The explanation we got from the campaign was that tough times for coal made it difficult for him to follow through with his charitable contributions, but that he intended to do so eventually,” Berkes said, however, Berkes was not able to get a comment from the campaign about the delinquent severance taxes.

This morning, the Justice campaign released a statement from Bill Shelton, an attorney for the Justice companies:

“Unlike the coal companies that filed for bankruptcy and walked away from their obligations, the Justice Companies are being responsible and following the agreed upon payment plan. I’ve dealt with these issues many times during my legal career, and the Justice Companies are taking the proper steps to make good on all MSHA commitments. To imply anything beyond that is purely for political reasons and ignores the facts.”