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West Virginia Legislature completes work on bill removing sunset clause of oil and gas property tax

2/23/2024

Charleston, W.Va. (WV News) – Legislation was completed Friday on a bill that would remove an expiration date in a section of state code related to the valuation of oil and gas property taxes.

House Bill 4850 passed the West Virginia Senate by a 28-to-6 vote, after having passed the House of Delegates on Monday in a 71-to-25 vote, with four members absent or not voting.

The bill will now go to the desk of Gov. Jim Justice for his consideration.

The bill would take out a sunset provision a code section enacted two years ago that sets the methodology used by the West Virginia Tax Department to assess oil and gas property taxes.

"The worst thing that we could do is allow this bill to sunset," said Sen. Charles Clements, R-Wetzel. "And then go into a period of unknown where we will end up with a lot lawsuits between counties, gas companies, royalty owners and everybody else."

Clements echoed comments made by other lawmakers, pointing to the "major errors" made by the West Virginia Tax Division that resulted in new natural gas wells in eight counties being undervalued.

The error, said to have been a clerical error made by a third-party vendor, caused these counties to receive significantly less property tax collections than they were owed.

"But these problems can be overcome," Clements said.

Clements then called on Finance Committee Chair Sen. Eric Tarr, R-Putnam, and asked him to pledge to oversee the development of a wholly new methodology in the future.

"What I'd like you to do is to sit down around the table with assessors from the counties, with royalty holders, with the tax department, with the people from the industry," Clements said. "And between now and next year come up with a formula that will work."

"I think it's a problem that we need to solve and I'm committed to helping you solve that," said Tarr in response.

Del. Trenton Barnhart, R-Pleasants, who voted against the bill in the House, urged a similar strategy.

“I cannot and I will not vote to enshrine a process that we know there’s been problems with and that we know has not been implemented right,” he said. “We need to get the stakeholders back together, fix this process and lessen the harm that it has already done.”

If the bill doesn't become law, the current methodology would expire on July 1, 2025.

Del. Vernon Criss, R-Wood, chair of the House Finance Committee, said if the bill was not passed, counties could potentially receive zero dollars from collections of natural gas propriety taxes.

Del. Vernon Criss, R-Wood, chair of the House Finance Committee, said if the bill was not passed, counties could potentially receive zero dollars from collections of natural gas propriety taxes.

The bill was the subject of a public hearing last week that featured multiple oil and gas sector stakeholders arguing in favor of its passage.

“A vote to remove the sunset provision as proposed in House Bill 4850 would extend current law, thus providing much greater surety, predictability and fairness to the industry and more greatly contribute to the financial well-being of all West Virginia counties,” said Charlie Burd, executive director of the Gas and Oil Association of West Virginia.

HB 4850 demonstrates state-level support of the oil and gas industry, said Brian Dayton, vice president of policy and advocacy for the West Virginia Chamber of Commerce.

“Let’s make no mistake about it,” he said. “Our federal government is making it harder and harder to produce natural gas and deliver it to the market. Because of that, West Virginia needs to be that much better at ensuring we can get these valuable resources to market and continue to fuel our country and the world.”

 

Story by Charles Young, The State Journal

 

 

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