The Times West Virginian

November 18, 2012

Officials worried about coal’s role in state finances

By Jonathan Williams
Times West Virginian

FAIRMONT — The coal industry has been an integral part of West Virginia for as long as there’s been a West Virginia, and at the height of the coal boom, hundreds of thousands of West Virginians were employed in the mines.

Today, the industry is smaller but still contributes to the state’s economy in essential ways.

One of the most important roles coal plays on the state level is its place in the budget, and officials worry that a downturn in coal production could have adverse effects on the state’s financial situation.

State Sen. Roman Prezioso, chairman of the Senate Finance Committee, said his committee has its work cut out for it in the coming months and years, a job made more difficult by the fact that severance tax revenues, which are taxes on natural resource production, are not keeping up with inflation or the state’s budgetary needs.

“If the severance tax continued to do well and gain money ... we’d be breaking even,” he said.

But Gov. Earl Ray Tomblin has already asked for a 7.5 percent cut across many agencies, signaling that the state is not looking forward to a strong year of revenues, and a lot of that comes down to a weakened coal market.

West Virginia operates on a balanced budget, meaning the state cannot spend more than it takes in year to year. A proposed draft of the fiscal year 2013 budget sets the state budget at around $4.1 billion for general revenue, which accounts for a lot of the state’s business.

Estimates for 2012 indicate that the severance tax makes up about 10 percent of that revenue. That includes money from coal, natural gas and other minerals mined in West Virginia.


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