By Erin Beck
March 11, 2019 - A bill that proponents hope will help slow the decline of the coal industry and that cuts tens of millions from state revenues is headed to the governor's desk.
House Bill 3142, sponsored by Del. Eric Householder, R-Berkeley, cuts the severance tax on thermal coal, also known as steam coal, from 5 percent to 3 percent over three years.
West Virginia House of Delegates Finance Chairman Eric Householder, R-Berkeley, left, leads a finance committee meeting Thursday, Feb. 21.
Photo by Perry Bennett, WV Legislative Photography
Householder did not respond to inquiries Saturday. Proponents have said the bill will help a struggling industry and devastated communities.
Proponents of the bill have noted that counties will get their normal cut – 12 percent of thermal coal severance taxes. That share would go no lower than counties' share during the 2019 fiscal year.
But the bill also leaves 88 percent of the severance tax on steam coal that state lawmakers have to replace in the state budget.
Lawmakers anticipate a $20 million loss in revenue the first year, $40 million the second, and $60 million each year after that.
West Virginia Department of Revenue Secretary Mark Muchow has told lawmakers that while no study had been done on the projected economic impact of the bill, he predicted the market would continue to decline, possibly at a slower pace.
Chris Hamilton, senior vice president of the West Virginia Coal Association, has said the cuts would help the industry be more competitive in regional electricity markets and cited an analysis that predicted some 400 mining jobs would be protected. He did not respond to an email seeking more information on how he arrived at that conclusion and a copy of the analysis.
Sean O'Leary, of the left-leaning West Virginia Center on Budget and Policy, says that while there is little research on coal severance taxes, the limited research that exists suggests the economic impact will be minimal.