West Virginia House Votes To Lower Severance Tax on Steam Coal

File Photo The West Virginia House of Delegates has voted to decrease the severance tax on steam coal.

CHARLESTON — With coal miners looking on from the galleries, the House of Delegates passed a tax reduction on the type of coal that feeds power plants in West Virginia and across the nation.

House Bill 3142, relating to reducing the severance tax on thermal or steam coal, passed 88-11 and now goes to the state Senate. The chamber erupted with applause from coal miners affiliated with Murray Energy once the vote total was announced. Murray Energy operates the Ohio County Mine near Benwood, the Marshall County Mine near Cameron, the Monongalia County Mine near Blacksville, W.Va., the Harrison County Mine near Clarksburg, W.Va., and the Marion County Mine near Mannington, W.Va. among several others across the country.

All delegates from Northern Panhandle counties voted in favor of the reduction.

“This industry has been suffering and this bill is a workable path forward,” House Finance Committee Chairman Eric Householder, R-Berkeley, said.

“This is finally a start to help our coal miners. … Our coal miners want to go back to work. They want to work in West Virginia, and they want to raise their families here.”

HB 3142 would reduce the severance tax on steam coal, which is used to generate electricity, from 5 percent to 4 percent the first year and to 3 percent the second year. It also removes any prohibitions on coal-producing counties regarding what they use their portion of the severance tax revenue on.

According to the Bureau of Business and Economic Research at West Virginia University, production of steam coal occurs primarily in northern West Virginia and has trended downward since the last half of 2016. This is due to the increased use of natural gas for generating electricity and competition from cheaper sources of steam coal.

“Preliminary data indicate mined tonnage during the first half of 2018 is nearly 8 percent lower than its year ago level for the state’s northern producing region,” according to authors Brian Lego and John Deskins. “Even as coal accounts for a dwindling share of electricity generation in the U.S., domestic power plants still represent the top destination market for West Virginia coal by a wide margin.”

Delegate Larry Rowe, D-Kanawha, raised concerns about the bill’s fiscal note. By fiscal year 2020, when the steam coal severance would decrease to 3 percent, the state would lose $64.2 million in tax revenue. He also said the bill does nothing for southern West Virginia’s metallurgical coal, which is used in steel manufacturing.

“It’s doing nothing to help the part of West Virginia that needs the help,” Rowe said. “The steam coal is not in McDowell County.

“It’s not in the southern counties of West Virginia. That’s where the crisis is. If we’re going to solve a crisis, let’s solve it in southern West Virginia.”

Republican and Democrat delegates from southern West Virginia disagreed with Rowe, pointing out that some southern counties have steam coal. They see HB 3142 as a way to help all coal-producing counties.

“After spending most of my life in the coal business and hauling it for 30 or so years, I can tell you that southern West Virginia does indeed have a lot of steam coal,” said Delegate Tony Paynter, R-Wyoming. “This may just get some of it moving again. … This will definitely help southern West Virginia, too.”

“If this can help make the industry a little more competitive, particularly in northern West Virginia where I’m from … I want to support that,” said House Minority Whip Mike Caputo, D-Marion. “I hope that it does increase production.”

Delegate Evan Hansen, D-Monongalia, warned lawmakers that cutting the severance tax would not be worth the jobs it might create. Hansen, an owner of an environmental consulting company, also warned about climate change.

“Our coal-fired plants can’t compete because the price of wind and solar is going down considerably,” Hansen said. “Another reason why these plants are shutting down is because these companies across the country and across the world … are commuted to renewable energy.”

“Thank you for reminding me that it’s time to put a severance tax on wind and solar,” joked House Finance Committee Vice Chairman Vernon Criss, R-Wood.

“Now for the first time in our history we’re going to help the people who brought us to the dance,” Criss added.

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