HB 3142 — Relating to reducing the severance tax on thermal or steam coal

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Red = new code to be enacted WEST virginia legislature regular session ENGROSSEDENROLLED House Bill 3142 By Delegates Householder, Criss, Rowan, Linville and Maynard [Originating[Passed inMarch the9, Committee2019; on Finance;

Reportedin oneffect Februaryninety 22,days 2019]from Apassage.] BILLAN ACT to amend and reenact §11-13A-3, §11-13A-6 and §11-13A-6a of the Code of West Virginia, 1931, as amended, all relating to reducing the severance taxtaxes; on thermal or steam coal to four percent, effective July 1, 2019;

reducing the severance tax on thermal or steam coal to threeincrementally percent,over effectivethree Julyyears; 1, 2020;

eliminatingproviding restrictionsfor ona countiestotal andreduction municipalitiesof expendingtwo percent of the countycoal andseverance municipalitytax portionat the conclusion of severancethe taxes;three year period;

eliminatingproviding certainfor reportinga requirements;reduction of thirty-five percent of the two percent reduction in the first year;

providing for a reduction of sixty-five percent of the two percent reduction in the second year;

providing for a full two percent reduction in the third year;

providing for an elimination of the severance tax on limestone or sandstone;

— Subject to the provisions of subsectionsubsection  (g) (h) of this section, the tax imposed in subsection (a) of this section shall be is five percent of the gross value of the natural resource produced or the health care service provided, as shown by the gross income derived from the sale or furnishing thereof by the producer or the provider of the health care service, except as otherwise provided in this article:

Provided, Provided, That effective July 1, 2019, the tax rate imposed by this subsection on the gross value of thermal or steam coal produced shall be reduced toincrementally fourover percent:the next three tax years for a total reduction of two percent by July 1, 2021.

Provided, however, That effectiveon July 1, 2020,2019, the taxreduction shall occur at the rate imposedof by35 thispercent subsectionof the two percent reduction, on July 1, 2020, the grossreduction valueshall occur at the rate of thermal65 orpercent steamof coalthe producedtwo shallpercent bereduction, reducedand toon threeJuly percent.1, 2021, at the rate of 100 percent of the two percent reduction.

In the case of coal, this five percent the rate of tax includes the thirty-five one hundredths of one percent additional severance tax on coal imposed by the state for the benefit of counties and municipalities as provided in §11-13A-6 of this code and the additional severance tax on coal imposed by the state for the benefit of coal-producing counties as provided in §11-13A-6a of this code.

(c) (d) “Certain health care services” defined.

(d) (e) Tax in addition to other taxes.

— The tax imposed by this section shall apply applies to all persons severing or processing, or both severing and processing, in this state natural resources enumerated in subsection (a) of this section and to all persons providing certain health care services in this state as enumerated in subsection (c) (d) of this section and shall be in addition to all other taxes imposed by law.

(e) (f) Effective date.

(f) (g) Reduction of severance tax rate.

(g) (h)(1) Termination and expiration of the behavioral health severance and business privilege tax.

Expiration of the tax as provided in this subsection shall does not relieve any person from payment of any tax imposed with respect to privileges exercised before the expiration date.

— The Tax Commissioner will shall issue a requisition on the Treasury for any amount finally, administratively or judicially determined to be an overpayment of the tax terminated under this subsection.

(i) Termination and expiration of the privilege tax on limestone or sandstone.

— The taxes imposed under this section for persons exercising the privilege of engaging or continuing within this state in the business of severing, extracting, reducing to possession and producing for sale, profit or commercial use limestone or sandstone shall cease, terminate and be of no further force or effect on and after July 1, 2019.

Termination of the taxes imposed under this section do not relieve any person of any liability or duty to pay tax imposed under this article with respect to privileges exercised before the effective date of the termination.

Moneys in the coal severance tax revenue fund, in compliance with subsection (i) of this section, may be expended by the county commission or governing body of the municipality for such public purposes as the county commission or governing body shall determine to be in the best interest of the people of its respective county or municipality:municipality.

Provided,(i) ThatAll inunexpended countiesbalances withremaining population in excesscoal ofseverance twotax hundredrevenue thousand,fund at leastthe seventy-fiveclose percent of thea fundsfiscal receivedyear from the county coal revenue fund shall be apportionedreappropriated to,to and expended within the coal-producingbudget area or areas of the county, said coal-producing areas of each county tocommission beor determinedgoverning generallybody byfor the Statesubsequent Taxfiscal Commissioner:year.

Provided, however, That the coal severance tax revenue fund moneys shall not be budgeted for personal services in an amount to exceed one fourth of the total funds available in such fund.

(i) On or before March 28, 1986, and each March 28 thereafter, each county commission or governing body of a municipality receiving such revenue shall submit to the Tax Commissioner on forms provided by the Tax Commissioner a special budget, detailing how such revenue is to be spent during the subsequent fiscal year.

Such budget shall be followed in expending the revenue unless a subsequent budget is approved by the State Tax Commissioner.

All unexpended balances remaining in coal severance tax revenue fund at the close of a fiscal year shall be reappropriated to the budget of the county commission or governing body for the subsequent fiscal year.

(j) (j) OnThe orState before December 15, 1986, and each December 15 thereafter, the Tax Commissioner shall deliverretain tofor the clerkbenefit of the Senatestate andfrom the Clerkadditional oftaxes theon Housecoal ofcollected Delegatesthe aamount consolidated report of the$35,000 specialannually budgets,as createda byfee subsection (i) of this section, for allthe countyadministration commissions and municipalities as of Julysuch 15,additional oftax by the currentTax year.Commissioner.

(k)(j) The State Tax Commissioner shall retain for the benefit of the state from the additional taxes on coal collected the amount of $35,000 annually as a fee for the administration of such additional tax by the Tax Commissioner.

Effective July 1, 2019, and thereafter, the portion of the severance tax on coal imposed by §11-13A-3 of this code dedicated and to be distributed for the use and benefit of the coal-producing counties as provided in this subsection shall not be less thatthan the amount distributed pursuant to this subsection for the fiscal year beginning July 1, 2018.

(f)(1)(f) (1) No distribution made to a county under this section may be deposited into the county's general revenue fund.

(2) Moneys in the county's coalCoal countyCounty reallocatedReallocated severanceSeverance taxTax fundFund shall be expended by the county commission solely for economic development projects and infrastructure projects.

(g)(5) On or before December 31, 2013, and December 1 of each year thereafter, the county commission of each county receiving a distribution of funds under this section shall deliver to the Joint Committee on Government and Finance a written report setting forth the specific projects for which those funds were expended during the next preceding fiscal year, a detailed account of those expenditures, and a showing that the expenditures were made for the purposes required by this section.

(h)(g) (g) An audit of any funds distributed under this section may be authorized at any time by the Joint Committee on Government and Finance to be conducted by the Legislative Auditor at no cost to the county commission or county commissions audited.

(i)(h) (h) The State Tax Commissioner shall propose for promulgation legislative rules pursuant to article three, chapter twenty-nine-a of this code for the administration of the provisions of this section, and is authorized to promulgate emergency rules for those purposes pursuant to that article.

NOTE:

The purpose of this bill is to reduce the severance tax on thermal or steam coal to three percent and eliminating restrictions on counties and municipalities expending and reporting the expenditure of the county and municipality portion of the severance tax.