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State revenues: Coal beginning to show production decrease

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State revenues: Coal beginning to show production decrease
By Jeff Jenkins, WV MetroNews

CHARLESTON, W.Va. — Tax collections in the new fiscal year in West Virginia started out in July the same way they ended June with severance taxes missing projections, state Revenue Secretary Bob Kiss said Wednesday.

Overall the state missed its July estimate by $4.8 million with much of that, $3.8 million, from a shortfall in severance tax collections. Kiss and others have started to notice a change in coal.

“This month it appears the severance tax shortfall is a function of reduced production in coal,” Kiss said. “In past we’ve seen a reduced price for coal but now it’s production.”

Kiss called the change a concern when joined with continued low prices on the coal market.

“The continued low-level of prices means a number of businesses in that industry are selling coal at a loss now, which also I’m sure contributed to the recent (coal company) bankruptcy filings,” Kiss said.

The stars appear aligned against the coal industry, state Deputy Revenue Secretary Mark Muchow said.

“All of those stars that were aligned in favor of coal a few years ago are now in the other direction and I don’t see this changing anytime soon. This is likely to continue for a couple of years,” Muchow said.

On the other hand, it appears oil and natural gas production are on the verge of a big boost as soon as the industry’s infrastructure issues are resolved.

“The industry is bullish on the future,” Kiss said. “The solving of that infrastructure issue will allow the transmission of more oil and gas outside the state.”