|UPDATE 3/10/2016 - What appeared to be a fast track bill to cut taxes on coal and natural gas has been sidelined.|
The House of Delegates shelved large tax cuts for the coal and gas industries passed by the state Senate last week, opting instead to study the cuts over the course of the next year.
The state tax coffers have already been emptied by the decline of coal and natural gas production.
The bill (SB 705) would have cut the severance tax paid by the coal and gas industries by 40 percent by the 2019 fiscal year.
It passed the Senate last week 19-15, with almost exclusively Republican support.
But it would also cost the state more than $100 million annually, according to estimates.
The House is working on a budget bill that would take about $30 million from the state's Rainy Day Fund to balance the budget, an idea that Gov. Earl Ray Tomblin opposes.
The largest coal producer in the state blasted Republican House leadership for nixing the tax cuts.
"The leadership of West Virginia's House of Delegates, and particularly Speaker Tim Armstead, have abandoned our coal miners today," said Gary Broadbent, a spokesman for Murray Energy.
Bob Murray, CEO of Murray Energy, has been calling for an immediate cut in the state's severance tax for nearly a year. Murray also gave $250,000 to a conservative super PAC ahead of the 2014 elections, in an effort to swing the West Virginia Legislature to Republican control.
Many of the elected legislators ran on a platform against "Obama's War on Coal."
ORIGINAL STORY 3/07/2016 - Long reliant on coal and natural gas taxes, West Virginia faces a budget quandary as its natural resource industries struggle and hardline legislative Republicans oppose higher taxes.
A House budget committee killed Democratic Gov. Earl Ray Tomblin's plan to bring in $78 million annually by raising taxes on cigarettes, tobacco products and e-cigarettes. Even Democrats opposed the final version, saying it didn't go far enough.
A tax hike to cellphone and landline use proposed by Tomblin has not been considered at all. It would have yielded $60 million annually.
Without new money coming in, deeper cuts could loom, including layoffs at the State Police, colleges and universities, state hospitals and other agencies.
Yet, there is no road improvement plan for the state's declining highways, repaving on a 33-year cycle.
ORIGINAL STORY 3/05/04 - The West Virginia Senate has passed big tax cuts for the coal and gas industry, at a time when the state faces huge budget deficits while it is raising taxes on consumers.
The bill was pushed by lobbyists for the extractors.
A push to raise West Virginia's tobacco taxes has been voted down by a House committee, killing a second tax increase proposed by Gov. Earl Ray Tomblin.
Delegates voted 21-3 Thursday against a bill to raise the cigarette tax by 45 cents to $1, worth $71.5 million yearly. Tobacco lobbyists have opposed the increase, with the state having among the lowest tobacco taxes in the nation.
The cuts would lower the severance tax rate paid by coal, gas and oil companies by 40 percent by the 2019 fiscal year, a loss to state and local governments of about $170 million per year, according to one estimate.
The state government is already reeling with a major deficit over the decrease in coal and natural gas production which historically have funded state and some county governments.
The bill (SB 705) passed 19-15, with the support of every Republican. On the Democrat side, all but Sen. Jack Yost, D-Brooke, voted against the tax cuts.
Coal and gas currently pay a 5 percent severance tax on the total value of the minerals they extract from the ground. That tax rate would fall to 4 percent in July 2017, and then to 3 percent in July 2018.
This week the WV Senate on Tuesday significantly amended a bill, adding a 1 percent sales tax, to raise about $200 million a year, along with increases in DMV fees.
"I just find it hard for us to turn around and say our solution to the state's fiscal woes is to grant more tax cuts to business and industry and put more tax burden on the people we represent," said Senate Minority Leader Jeff Kessler, D-Marshall.
Democrats argued that the bill would do nothing to keep mines open and amounts to a giveaway to the industry.
Murray Energy CEO Bob Murray, who runs the West Virginia's largest coal company, has been asking lawmakers for an immediate cut in the severance tax for nearly a year. Murray also is a major Republican donor, having given $250,000 to get Republican legislators elected in 2014.