Coal impacts Mid-Ohio Valley, too
PARKERSBURG – Although Wood County is not a large coal-producing county, it still benefits from the coal mining taking place elsewhere in West Virginia and can be impacted by any changes to the industry.
All 55 counties in West Virginia, including non-coal producing counties, receive a portion of coal severance funds, said Chris Hamilton, vice president of the West Virginia Coal Association.
“(This money goes) to fund or underwrite the cost of important infrastructure projects, educational and government sponsored programs for the elderly, less fortunate and all county residents,” he said.
This is done through two direct programs. The first $23 million collected in severance taxes goes towards sewer and water and infrastructure projects around the state through a grant program administered by the West Virginia Water Development Authority.
“Every county has received millions in infrastructure projects over the years,” Hamilton said.
In 1996, the Parkersburg-Wood County Development Corp. received $1.922 million and in 1999, the Parkersburg Utility Board received $4 million, he said, adding local agencies received other money in the 2000s for projects.
For the other program, the portion of coal severance collections which go to all 55 counties is based on coal production and populations.
“Coal producing counties receive the lion’s share but again, all 55 counties receive cash payments to fund local or municipal programs/projects,” Hamilton said.
Hamilton reports the breakdown of money distributed to Wood County in 2012 as $4,059.89 for North Hills, $153,671.67 for Parkersburg, $52,451.80 for Vienna, $14,190.10 for Williamstown and $199,945.08 for the Wood County Sheriff’s Department.
Wood County Administrator Marty Seufer said the county uses coal severance to buy patrol cars for the sheriff’s department. The money has been used for direct purchases and as downpayments on vehicles, although the county is moving away from having to make payments. The county has bought anywhere from four to 12 vehicles in a given period based on need.
“It all depends on the funds available,” Seufer said.
The county budget would be a lot more tighter if that money was not available as the sheriff’s department needs those vehicles in order to do its job.
“It would be a bigger strain on the budget than what it is now,” Seufer said if the county did not get that money. “The county would end up having to find that money somewhere.”
Local entities could be seeing less revenue in the coming years due to changes in policy regarding coal and a new way of distributing the coal severance money.
A new formula was implemented last year in how the coal severance money is allotted with the 34 coal-producing counties in West Virginia receiving additional coal severance tax revenue.
Effective July 1, 2012, an additional 1 percent of the tax attributable to the severance of coal was paid to the 34 coal-producing counties. Effective July 1, 2013, the percentage climbed to 2 percent and it continues to climb 1 percent each year until it reaches the maximum of 5 percent, effective July 1, 2016.
However, Hamilton said never before in the state’s history has the coal industry been responsible for a greater share of the state tax revenues or prosperity throughout all facets of state and local governments.
“This holds true today even as we brace for tougher times and endure an industry-wide state of austerity,” he said. “As a result of significant and sustained increases in coal severance and other business taxes, the state has been one of a few states that has ended the year with a surplus or balanced budget during the current recession years from 2008 to the present and the ‘rainy day’ fund has climbed to an unprecedented levels.
“Coal and electric utilities account for over 60 percent of all business taxes.”
Coal severance taxes are based on the sale price of coal. Coal severance collections have more than doubled during 2007 to 2012 to a record high of $500 million 2012, Hamilton said.
However, federal policies have been making conditions harder on the industry as a whole as coal prices plunge downward with a loss of a fourth of the state’s output or production and 3,000 coal jobs, Hamilton said. He added that several state power generators have closed and others have made the switch to natural gas to generate electricity.
Those losses will have an impact on sales and the coal severance money brought in.
“As coal production and pricing go up or expand, greater coal severance taxes are assessed and collected,” Hamilton said. “This is in addition to property, franchise, income and other taxes imposed on the industry.
“Conversely, when production or pricing fall, total collections decrease,” he said.