March 4, 2019 - As staunch, longtime supporters of the coal industry, we understand that it is hurting.
After years of being the energy source that literally powered this country to economic and industrial greatness, coal is on the outside looking in, with cheaper fuels like natural gas and environmentalists screaming for “green energy” now the focal points.
With that in mind, we understand West Virginia lawmakers who have introduced legislation to reduce the severance tax on steam coal, the form used for power generation, from 5 percent to 3 percent over two years.
The 1 percent-a-year reduction is estimated to save between 150 to 200 coal mining jobs, proponents say. Not by accident, dozens of coal miners were on hand Wednesday when delegates passed House Bill 3142, sending it to the Senate.
“Right now, our coal industry is struggling. It’s teetering on a crisis. This is the best thing we can do for them,” House Finance Chairman Eric Householder, R-Berkeley, said.
He defended the bill against opponents’ claims that it would have minimal impact. He emphasized that if only 100 jobs were saved, it would be worth it.
And if a new business were moving to West Virginia to provide 100 new jobs, we would all be applauding it.
Well, that is, unless it was costing the state $60 million in revenue.
And that’s what the fiscal note attached to this bill says, according to figures from the state Department of Revenue.
That’s a hefty price to pay, opponents argued.
“This bill does come with a fiscal note, and once the full 2 percent reduction goes into effect, that’s a cost of $60 million a year,” said Del. Evan Hansen, D-Monongalia. “That’s $600,000 per job. ... Maybe it will be 500 jobs — that’s $120,000 a job,” the Charleston Gazette-Mail reported.
Despite the vocal opposition, the bill passed easily, 88-11, and is now in the Senate Finance Committee. Since it was only referenced to one committee, senators have plenty of time to advance the bill.
But before senators do, they should consider just how much positive — and negative — impact House Bill 3142 could have.
While we would love to see more ways to save coal mining and its good-paying jobs, there are consequences to this bill that could prove costly in many ways.
We have to wonder why steam coal is being carved out an exemption while metallurgical coal, which is actually doing well and creating more jobs, is being ignored.
With one successful mine already in Taylor County, North Central West Virginia will soon be home to another, this one in Barbour County.
It’s projected to add 600 jobs — yes, 600 jobs — to the marketplace in short order. That’s real economic development, and it’s the type that would seem to be deserving of some tax-break consideration.
We also wonder why natural gas, which is poised to rebound again but currently is in a regulatory stalemate that has caused pipeline construction delays, doesn’t warrant some reduction in taxes. Lobbyists and industry officials have been hinting at such for two years.
The reality, of course, is that the state can ill afford to reduce severance taxes on extractive industries. While the state’s budget has rebounded in the past two years, much of that has been because of severance taxes.
In fact, there are those who make the argument that we don’t charge enough for the earth-moving industries that have long taken minerals from the ground and moved money and resources out-of-state.
But we are reminded that those industries are not nameless and faceless corporations — they are our friends and neighbors. And they have provided great impact on our state in many, many positive ways.
It would be great to provide them a boost — if we could afford it.
Reducing the state’s severance taxes is a dangerous game in the best of times. And these certainly aren’t the best of times.
For now, lawmakers are best to leave well enough alone and forgo the severance tax cut.
Studies indicate that the potential rewards aren’t worth the costs. The state would be better off to find other ways to boost coal or aid miners.
Right now, cutting the severance tax isn’t the best answer for West Virginia.