CHARLESTON, W.Va. — The state Senate Finance Committee originated a bill Monday afternoon to decrease the state’s coal severance tax by two percent over two years in hopes of making West Virginia’s coal more competitive with other states.
The rate would go from 5 percent to 3 percent under the bill (SB 705), Sen. Finance Committee Chair Mike Hall (R-Putnam) said.
“We’re (currently) taxing this industry out of our state,” Hall said. “I would say we need to keep them here and this is why we’re trying to get those revenues up. Others will disagree, but I would say that’s the answer.”
Other coal states have either no severance tax or they are lower than West Virginia’s rate, Hall said.
“The business is walking away from us,” he said.
The West Virginia Coal Association and Murray Energy CEO and Chairman Bob Murray have been pushing for the decrease. The bill appeared to have little life until Monday, the last day this session the bill could be read on the Senate floor a first time and stay alive. Senators debated Monday evening whether or not to read the bill a first time.
Sen. Art Kirkendoll (D-Logan), a coal supporter, argued against the bill, expressing concern of how cutting severance taxes would further hurt coalfield communities who rely on the distributed revenue. Sen. Mike Woelfel also expressed concern for coal counties.
“Now we’re going to turn our backs on those folks that don’t even have as much as a red light in their counties. Now we’re going to cut back their severance tax shares,” Woelfel said.
Hall disagreed.
“I’d say coal severance revenues should go up (by cutting the tax) but if we continue to lose this industry to other states there’s not going to be any tax to factor in. It’s going to continue to go down,” Hall said.
The bill is scheduled to be on second reading, amendment stage, during Tuesday’s floor session.
Gov. Earl Ray Tomblin signed a bill into law Monday that takes a special tax off coal that’s been there for 10 years to pay down the old workers’ compensation debt. The tax, which has been 56-cents a ton, will go away July 1. If approved, the severance tax decrease would begin decreasing next year.