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Coal severance tax revenues plummeting in Barbour Co.

by Nora Edinger

REGIONAL EDITOR

PHILIPPI -- With coal severance income falling, Barbour County officials are preparing for a slimmer budget in 2001.

"At this point, we're just losing that revenue," said Chuck Foley, county coordinator.

Foley told commission members Monday that funding is anticipated to decline again over the next fiscal year, for which the commission will prepare a budget in March.

"Five or six years ago, we were getting about $200,000 a year," Foley said.

For fiscal year 2000-2001, which began in July, the county had budgeted what officials thought was a conservative $70,000. But a recent quarterly estimate of further losses had the commission adjusting that figure to $31,000 this week.

"We're trying to cut back a little bit," he said.

Coal severance revenue, which is a form of taxation, is based on two figures. Twenty-five percent of what each county receives is based solely on population and is distributed statewide. The remaining 75 percent is based on coal production in each county.

Barbour County's coal production has steadily declined in recent years, he added. The impetus of the budget adjustment was a recently released figure that showed 100,000 fewer tons of coal were mined in Barbour County in the last quarter than in the previous one.

"It will have an impact," he said of the long-term effect on county finances.

Barbour uses the coal funds in a variety of ways, including contributions to various agencies and courthouse projects. Foley did not want to speculate yet as to what programs will be most impacted, as that will be decided by the commission.

State tax division spokesman Mark Muchow said Barbour County's experience is not an isolated one. Between fiscal year 1999 and 2000, the 25 percent of severance revenue distributed statewide declined from $16 million to $14 million. That is in line with a reduction of coal production of about 10 percent.

Muchow, chief administrator of revenue operations, said several factors have led to the decline. Primarily, exports are down because new nations have entered the global market and a series of mild winters have lessened domestic demand.

The second phase of the federal Clean Air Act also kicked in in 2000, making the higher sulfur coal found in West Virginia less desirable.

Muchow anticipates a continued but slow decline statewide in coal severance revenues.

Regional editor Nora Edinger can be reached at 626-1403 or by e-mail at nedinger@exponent-telegram.com.

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