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Tax cut on the way, ailing West Virginia coal seeks even bigger break

CHARLESTON, W.Va. (AP) — Already set for a break, the ailing coal industry is making a late-game plea for a bigger tax cut in cash-strapped West Virginia.

Democratic Gov. Earl Ray Tomblin signed a bill Monday that will eliminate a 56-cent-per-ton surtax on coal by July 1 at the latest, a break worth about $51.5 million in the 2017 budget year. The surtax has long helped pay down a workers’ compensation debt.

Later that day, a bill emerged in the Republican-led Legislature to drop the overall coal severance tax. The bill headed for a vote Wednesday would drop coal’s tax rate from 5 to 4 percent of its gross value in July 2017, and to 3 percent in July 2018. But it may be overly weighed down by an amendment accepted Tuesday that adds tax cuts for oil and natural gas producers.

Tomblin’s administration expects the larger coal tax cut itself would leave a hole in the state budget of well more than $100 million, and further deplete money for struggling coal-producing counties, said Tomblin spokeswoman Shayna Varner.

“At a time when the state is already dealing with financial difficulties, additional tax cuts are not something the state can consider at this time,” Varner said.

Voicing desperation, West Virginia Coal Association President Bill Raney told state senators Monday his industry needs any help possible. The Mountain State’s coal industry has shed thousands of jobs amid competition from natural gas, thinning coal seams, more productive competing coal regions, dismal domestic and international markets and federal regulatory pressures.

The bill quickly stirred Democratic concerns that the break would hamstring future state budgets and reduce coal revenue dispersed among already-hurting coal-producing counties. There’s even more uncertainty over whether a break for the fizzling industry would help put many miners back to work.

The state expects a $466 million 2017 budget gap, largely because coal and natural gas severance tax dollars have dwindled. Some coal-producing counties have slashed services because of dwindling coal revenues, from eliminating law enforcement jobs to closing free trash dumps.

“It’ll put money in some of the coal operators’ hands. But it won’t do anything to create a job,” said Sen. Art Kirkendoll, a Logan County Democrat and reliable pro-coal vote. “And it won’t do anything to have money in your counties to live and do what you need to do, and (have) what you deserve to have.”

Coal giant Murray Energy, the loudest critic of West Virginia’s severance tax, called the bill “much needed.”

The St. Clairsville, Ohio-based company has announced layoffs for more than 1,000 people at its northern West Virginia mines since April 2014. Each time, Murray called West Virginia’s coal severance tax “extremely excessive.” The company says West Virginia needs to be more competitive with states such as Pennsylvania, which has no severance tax.

“Indeed, all of the proceeds from the coal severance tax reduction will go directly to our electric utility customers, through the language of our coal sales contracts, and none of it to any coal company,” said Murray spokesman Gary Broadbent.

At a January coal event in Charleston, company namesake Robert Murray gave a booming address that demanded the tax drop from 5 to 2 percent. His voice often rising to a shout, the GOP-bankrolling coal executive said, “these government officials can no longer say that they support coal people in this state” if they don’t support the tax break.

West Virginia’s legislative session ends March 12.

In related news, West Virginia Senate OKs bill to limit nuisance lawsuits.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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