The president of the West Virginia Coal Association has asked for a decrease in the coal severance tax, following weeks of pronouncements by state leaders that the industry has rebounded.
Bill Raney, president of the West Virginia Coal Association, asked lawmakers during legislative interim meetings Monday for a decrease in the coal severance tax, from 5 percent to 2 percent.
"We're losing ground," Raney said.
Meanwhile, Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, told lawmakers her industry could not handle a severance tax increase.
Members of a task force studying funding for the state Public Employees Insurance Agency (PEIA) have considered a severance tax increase to fund the struggling program. At a recent task force meeting though, Mark Muchow, deputy secretary for the Department of Revenue, noted funding from extraction industries would be unstable over time.
Del. Mick Bates, D-Raleigh, said that "of course" industry representatives would say they can't afford increases.
"They invite these people in because they want the message to be a certain way," he said, referring to GOP leadership. "This is the industry perspective. No one wants the tax on their industry to go up."
Bates, who is also a member of the PEIA task force, said that increasing the natural gas severance tax had been the most popular proposal among the public.
President Donald Trump had announced at a campaign rally last month that the coal industry was "back." GOP leaders in West Virginia have also taken credit for a comeback.
The West Virginia University Business for Business Economics and Research, meanwhile, had predicted long-term declines for the coal industry, and attributed recent short-term gains to increased demand overseas, not policy changes in the U.S.
Raney confirmed Monday that a recent increase in production is mainly due to demand overseas, not to domestic policy changes. He called that demand "fragile."
Brian Lego, who co-authored WVU's report, said Monday that without seeing the proposal, it would be difficult to offer a well-informed opinion as to whether a tax decrease would change his prediction, but he offered some guidance:
"My initial reaction would be that cutting the rate could have more of a short-term positive impact on production (hard to say how much without performing an analysis), but mean less as time goes on, since coal prices will rise as reserves are depleted," he said in an email. "In addition, the question would also be the impact on the state's tax base since reducing the rate is going to reduce overall revenue by some extent, even allowing for some percentage increase in production."
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