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WV coal severance fell in 2012: Muchow

WHILE not surprising given the hard hits West Virginia has taken in the US coal market downturn, ...

Donna Schmidt

Deputy revenue secretary Mark Muchow said the drop in coal mines and lower coal prices both played a role in the collection totals, which were down 16% to $US386 million in 2012 versus $460 million in 2011.

The state’s mines also pay a lower rate on average as West Virginia legislature officials announced a structure in 1997 for coal mined from thinner seams.

Specifically, compared to the 4.65% of sales required for severance tax, mines with seams less than 45 inches thick pay 1.65% and operations with seams thinner than 37in pay 0.65%.

However, with lower overall production, the impact is significant.

Muchow noted that the gains were really only felt in the first few years the structure was in place.

He told one outlet that because severance numbers were based on volume and prices for both metallurgical and thermal coal but not as much based on seam thickness, the information was not readily available but might be in the future.

“I think we're going to change the tax return to request that type of data in the future,” he said.

In the interim coal itself was not going anywhere, he said.

“Coal is still the dominant natural resource produced in West Virginia,” Muchow said.

“Ten years from now coal will probably still be dominant but probably less than it is today.”

He said the state ended the recently completed fiscal year with a $90 million shortfall.

A portion of that was made up from other areas in the West Virginia budget, including $45 million from the state income tax reserve account.

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