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Researchers push for higher taxes, fees, fines on coal

CHARLESTON, W.Va. -- State lawmakers were asked Monday to consider increasing not only the state's main tax on coal but also the fees and fines paid on the trucks that haul that natural resource.

The recommendations were among a half-dozen from the authors of a recent report that concluded that the coal industry is costing the state budget more than it provides.

The West Virginia Center for Budget and Policy and the firm Downstream Strategies presented their findings to a House-Senate legislative interim subcommittee. Their June report estimated that while revenues from the industry topped $600 million during the 2009 budget year, it cost the state $97.4 million more.

The costs included $93 million spent repairing roads damaged by heavy coal trucks, and $173 million worth of tax credits and exemptions.

While calling on the Legislature to revisit the tax breaks, Rory McIlmoil of Downstream Strategies recommended fees on trucks of at least $2.80 per ton hauled. The report estimates that fees now average around 8 cents per ton. McIlmoil also said increasing fines could help deter overweight trucks.

Hiking the severance tax on mined coal from 5 percent to 6 percent, meanwhile, would raise another $75 million annually. The report recommends sending 80 percent of that new revenue to coal-producing counties.

The report drew some of its revenue-related data from a February study of the state's coal economy by researchers at Marshall and West Virginia universities. The lead Marshall contributor to that study warned lawmakers Monday of flaws in the subsequent report.

Cal Kent, Marshall's vice president of business and economic research, said the June report omits property tax revenues and discounts the overall impact of severance-tax proceeds. Kent also took issue with the way it counted tax exemptions as costs to the state budget.

All told, Kent estimated that the industry provides $490 million more in revenues than costs.

Kent and Marshall researcher Elizabeth Eastham also provided figures showing that West Virginia levies the heaviest tax burden on its coal industry when compared to a dozen other coal-producing states, including all five of its neighbors.

West Virginia, the nation's second-largest producer, taxes coal as real estate at differing rates depending on whether it's actively mined, held in reserve or considered unmineable. Wyoming, the nation's coal leader, does not impose any property taxes on coal land.

But McIlmoil and the budget and policy center's Ted Boettner noted that their report also estimates $4 billion in such "legacy" costs as played-out surface mines that await cleanup and damage to state roads and bridges not yet repaired. It also cites a projected decline in coal production within the next decade and echoes calls for West Virginia to diversify its economy.

Kent told lawmakers that the question of coal's costs merited further study, while Boettner said his group's report aimed to start a dialogue on the subject. Delegate Nancy Guthrie, D-Kanawha, said the subcommittee should request a new study that draws from both reports as well as a third recently issued on the topic, and "determine, once and for all, what the true impact and costs and benefits are from coal."

"Each one of these provides only a snapshot," said Guthrie.


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