By David Beard

March 11, 2019 - In West Virginia, coal miners gathered outside the Senate chamber Saturday morning to celebrate passage of two bills aimed at boosting the state’s coal industry.

One bill offers severance tax incentives for companies to expand production. The other offers a phased severance tax break to steam coal, which hasn’t rebounded as well as metallurgical coal and faces competition from cheaper out-of-state coal.

Senate President Mitch Carmichael and a couple other Republican senators greeted the miners and offered some words of support.

Mitch Carmichael

Carmichael told them, “It is only because of your efforts and what you do that we are able to craft a budget. We are indebted to you, and you don’t hear it often enough how proud we are of you and the important part you play in the West Virginia economy.”

The bills, he said, will allow West Virginia coal to compete on a level playing field.

Sen. Eric Tarr, R-Putnam, talked about the severance tax cut. “If we can bring down the cost of coal, bring down the cost of energy, it helps every West Virginian and it certainly helps you guys producing it.”

The severance tax reduction bill, HB 3142, was heavily debated in both houses, with opponents saying the state can’t afford the lost revenue with all the planned spending increases in the works.

Sen. Ryan Weld, R-Brooke, told the miners about that debate, and that two different thought processes were at work.

One, he said, was to let the companies keep and invest the money in their operations and people. The other was to keep it in the state coffers to spend on state services.

His view, he said was to invest in the miners.

HB 3144 is the North Central Appalachian Coal Severance Tax Rebate Act. It allows a coal company to obtain a severance tax rebate of 35 percent of the cost of new machinery equipment used to sever coal. “The rebate amount is limited to 80 percent of the state portion of the severance taxes attributable to the additional coal produced as a result of the new machinery and equipment.”

It passed the Senate just after 6 p.m. Friday, 24-9, and was sent back to the House where it awaits for amendment concurrence. The House concurred early Saturday afternoon and sent it to the governor.

HB 3142 is the severance tax cut. It cuts the severance tax from 5 percent to 3 percent across three years, and will amount to a $60 million revenue reduction in the third year. More divisive, it passed the Senate 19-12 at 10:47 p.m. and returned to the House amendment concurrence. The House concurred late Saturday afternoon and sent it to the governor.

West Virginia Coal Association Vice President Chris Hamilton helped coordinate the morning’s activities and told The Dominion Post, “I think both bills are going to help immensely.”

People want to see coal recover to where it was seven or eight years ago, he said. “I’m not sure we’re going to get that far with these bills, but they’re certainly going to catapult us over and beyond where we are today.”

The severance tax deduction will put West Virginia steam coal on a better footing to compete against Pennsylvania and Illinois Basin coal, he said. Miners in Morgantown and Wheeling at working at a $2.50 per ton disadvantage, and this may halt some of the coal coming down the Ohio River and replacing West Virginia coal in area power plants.

Asked about the revenue reduction, Hamilton cited again the return on investment he previously addressed in Senate Finance,

He cited a PricewaterhouseCoopers report saying the tax cut could generate 400 new mining jobs, 300 transport jobs and 1,000 downstream jobs. It would generate $300 million in economic activity and $130 million from the new jobs.