Tax

The West Virginia House of Delegates has officially abandoned legislation that would have significantly cut the state’s 5% oil, natural gas and coal severance tax rate. House leaders said that they would instead study the cuts over the next year. The West Virginia Senate passed SB 705 in early March. It would have lowered the severance tax rate to 4% by July 2017 and to 3% in July 2018. The state tax department estimated that the cuts would have cost the state up to $129 million in 2018. Sources had told NGI’s Shale Daily prior to the House’s announcement that the bill stood only a small chance of being passed (see Shale Daily,March 8). Democratic Gov. Earl Ray Tomblin also indicated that he would have vetoed the bill.

The West Virginia Senate passed a bill on Wednesday that would sharply reduce the state’s severance tax rate on oil, natural gas and coal production.

Pennsylvania Gov. Tom Wolf on Tuesday continued to push for broad spending increases that would be funded by a suite of new taxes, renewing a proposal during his 2016-2017 budget address that calls for a 6.5% severance tax on natural gas production.

With implications for the future volumes of natural gas used for electric generation, the state of Washington and a California public sector utility are the latest to push for reducing coal use and enacting a carbon tax.

West Virginia’s severance tax collections continued to plummet in November, driven primarily by low oil and natural gas prices, which have also hurt personal income tax collections and helped to widen a projected budget deficit for fiscal year 2016.