Gov. Justice signs bill lowering coal severance tax
In front of West Virginia coal miners, Gov. Jim Justice signed a bill lowering severance taxes on thermal or steam coal in West Virginia from five percent to three percent.
Justice had a signing ceremony Wednesday at the Harrison County Coal Company’s Harrison County Mine in Mannington, signing into law House Bills 635, 3142, and 3144.
“It’s two total percent over three years, so the way that all shakes out, it probably is somewhere around .66 of one percent,” Justice said following the ceremony.
“If you look at where prices are today, it equates to about 40 cents a ton, so at the end of the day, in a lot of ways, it’s semi-insignificant to everything except assuring that we’re going to have these jobs.”
Critics of the cut disagreed.
The change will amount to a $60 million reduction of state revenue in the third year.
Senator Randy Smith, a coal mine safety employee, complained that the cut happened at the same time Justice is looking for every dollar possible to fix West Virginia’s deteriorating roads.
“While he’s looking for money for roads he’s having a dog and pony show to sign the coal severance tax bill,” said Smith, R-Tucker.
The West Virginia Center on Budget and Policy, an economic think tank and advocacy organization, also criticized the severance tax cut.
“We all want well-paying jobs and more investment in our communities, but handing over $60 million a year to mostly wealthy out-of-state corporations is not going to get us there,” stated Ted Bottner, the executive director of the organization.
“In fact, it will do the opposite by taking millions of dollars from our schools, roads and colleges while doing little to nothing to help coal-mining communities.”
With an average coal price of $55, Justice said the cost savings would be $1.10 per ton from the coal mine point of view.
“The state can afford to do without that $1.10, but the state can’t afford to do without these jobs,” he said. “Your multiplier effect on no tons is zero. You don’t get severance tax on zero tons.”
The current five percent severance tax on thermal and steam coal is broken down to 4.65 percent for state general revenues and .35 percent for coal-producing counties and all counties.
The two percent reduction would be to the 4.65 percent state share.
“Here’s where it becomes so significant,” Justice said. “If that $1.10 keeps this company and all of our thermal companies in West Virginia running then not only are we recouping the three percent, but we’re recouping the benefits of all the jobs.”
Without such a tax decrease, Justice said there would be a risk of some companies closing their doors.
“If they decide they’re not going to do anymore, then you know what happens? 55 companies declare bankruptcy,” he said. “We can’t do without these jobs. There’s no way around it. The multiplier effect of a coal miner’s job is astronomical. At the end of the day, we need to do everything in our power to preserve it, and that’s what I’m trying to do.”