Jan. 27—A West Virginia House of Delegates committee has advanced the same coal industry-friendly bill that drew opposition last legislative session from lawmakers representing coal-producing counties after state tax officials estimated it would cost local governments $12 million in 2022.
In a 12-11 vote Tuesday afternoon, the House Energy and Manufacturing Committee approved House Bill 2493, which would change the state Tax Department's methodology for evaluating coal properties.
The Tax Department estimated in a fiscal note for HB 2493 last year that it would initially reduce property tax revenue by roughly $12 million for local governments in 2022, with a change in property tax revenue in future years dependent on market conditions.
The fiscal note projected that the bill would result in less-predictable income streams for local governments by ending the department's practice of using a three-year average time frame for valuation.
Under HB 2493, annual production and average coal price would instead be based on the preceding calendar year.
That would make local government revenue streams from coal property taxes more subject to fluctuations in the coal market. A weak market in the year leading up to the 2021 legislative session would have resulted in reduced property tax revenue of $12.2 million for tax year 2022, according to Tax Department estimates circulated among delegates before they passed the bill last session.
The bill died in the Senate Finance Committee last session after passing the House in a 64-34 vote.
No fiscal note has yet been provided for this session's HB 2493, which is identical to last session's HB 2493, other than pushing back the date that property tax assessment changes would begin from July 1, 2022, to July 1, 2023, to give the Tax Department time to adjust its rulemaking.
HB 2493 would exclude coal beds less than 35 inches thick from classification as mineable coal for property tax valuation purposes. It also excludes permitted coal seams from classification as active until coal is depleted under a permit for assessments made from July 1, 2023, and beyond.
Counties that would have sustained the biggest financial losses from HB 2493 for tax year 2022 were Marshall ($1.75 million), Logan ($1.35 million), Wyoming ($1.28 million), Boone ($1.06 million), Raleigh ($952,547) and West Virginia's poorest county, McDowell ($781,846), according to Tax Department estimates. Kanawha County was projected to lose $593,531.
Five of the bill's 10 sponsors, including lead sponsor Vernon Criss, R-Wood, represent counties that the Tax Department projected would have lost no money in tax year 2022 if HB 2493 became law.
Criss and fellow Delegate Terri Sypolt, R-Preston, argued that the Tax Department's fiscal-impact estimate for HB 2493 is inflated.
But the measure drew criticism from legislators fearing significant revenue losses for their constituents at Tuesday's meeting. Delegate Dave Pethtel, D-Wetzel, observed that last year's fiscal note estimated a $713,933 loss for Wetzel County for 2022.
"I'm certainly not going to vote for anything that's going to take revenue out of Wetzel County, especially not knowing what the updated fiscal note may be," Pethtel said.
Delegate Tony Paynter, R-Wyoming, observed estimates that Wyoming and McDowell counties, parts of which comprise most of his district, would lose a combined $2.07 million in 2022.
"Neither one of them can afford to take that kind of hit," Paynter said. "Now, will this help spur mining activity to negate that? Possibly, but at this point, I don't think so. So there's no way I can support this."
Delegate Dianna Graves, R-Kanawha, spoke in favor of HB 2493, arguing that it is necessary to comply with the West Virginia Constitution's requirement that taxation be "equal and uniform."
The Energy and Manufacturing Committee referred the bill to the House Finance Committee.
Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or mtony@hdmediallc
.com. Follow @Mike__Tony on Twitter.
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