Murray: Reduce severance tax to save coal jobs

Coal operator wants West Virginia tax reduced from 5 to 2 percent

By Don Smith - For Ohio Valley Publishing

CHARLESTON, W.Va. — West Virginia politicians must stop the “political platitudes and lip service” and take immediate action if they want to save coal mining jobs in the state, according the nation’s largest underground coal mining operator.

Bob Murray, CEO of Murray Energy Corp., called on state legislators to cut West Virginia’s severance tax on coal from 5 to 2 percent during his keynote speech for the 43rd annual West Virginia Mining Symposium, held at the Charleston Civic Center, Wednesday and Thursday.

“Only immediate action to reduce the state’s tax on coal extraction will help protect” the coal jobs remaining in West Virginia, Murray said, speaking to coal industry representatives gathered just blocks away from the state Capitol where legislators are in session.

As keynote speaker, Murray followed West Virginia Senate President Bill Cole and Speaker of the House of Delegates Tim Armstead to the podium and called on both legislative leaders to hear his message.

“Past West Virginia leadership carried the state’s finances on the back of coal,” Murray said, urging the current leadership to stop talking about the importance of coal jobs in the state and take action to save those jobs.

Eliminating just the current 56-cent a ton tax on coal added on to bail out the state’s workers’ compensation fund — as has been discussed this legislative session — will not be enough to make West Virginia competitive with Indiana, Illinois and Pennsylvania, which have no severance tax, or Ohio and Maryland where the tax is less than 15 cents a ton. West Virginia’s current severance tax is $2.81 a ton, Murray said.

The current 5 percent severance tax is a hardship on West Virginia coal companies and puts them at a disadvantage with other states competing for the same market, Murray said, telling those assembled that on New Year’s Eve, Murray Energy “made a $7.5 million severance tax payment to West Virginia and simultaneously was forced to lay off another 675 miners,” most at West Virginia mines.

There are currently 49 bankrupt coal companies in the United States, according to Murray’s presentation, and 27 of them are in West Virginia.

Speaking earlier, Cole and Armstead told those assembled of the state’s financial woes. Cole said he fears the state budget deficit in the current fiscal year could reach $450 million. The current estimate is at $353 million, Cole said, explaining that figure “is probably light.”

West Virginia’s original deficit estimate was $250 million, with a $190 million decline in severance taxes, Cole said, adding he knew it would be much greater than $250 million because if severance is down, other revenue – payroll taxes, spending, sales taxes — would also be down. The first estimate didn’t estimate the impact of losing coal mine jobs correctly in Cole’s opinion.

Murray generated discussion during his speech by presenting estimates that each coal mine job in West Virginia generates between $1.2 million (a WV Coal Association figure) and $6.3 million (a Murray Energy figure) in annual economic activity.

While Murray spoke about the accuracy of his accounting firm’s numbers, many people on social media, who were following postings about the coal symposium, began challenging the figures. Murray distributed his figures after the presentation. Murray’s numbers used a 7.4 average multiplier of secondary jobs for each coal mine job.

• WVCA president Bill Raney opened the symposium, talking of the industry’s challenges, welcoming guests and introducing speakers. Raney spoke frankly about the industry, telling those in attendance that the panel of speakers had a lot of information to present but that “good news is scarce” for the coal industry.

• Gov. Earl Ray Tomblin’s chief of staff, Charles Lorensen, welcomed attendees on behalf of the governor, who was working with state officials to see when and where the state could lift the current statewide state-of-emergency following Winter Storm Jonas.

• Cole and Armstead recapped bills approved in 2015 and efforts planned for 2016. Armstead pointed to the bills that were “improvements for the state’s business environment” the Republican-led legislature passed in 2016. Talking of new coal regulations in West Virginia, Armstead said all bills are designed with the opinion that “coal will always be a big part of West Virginia’s future.”

Armstead cut short his presentation to return to the Capitol for a meeting on a Legislative bill addressing prevailing wage. He also invited all attendees to a public hearing on right-to-work legislation.
Coal operator wants West Virginia tax reduced from 5 to 2 percent

By Don Smith

For Ohio Valley Publishing

Don Smith is executive director of the West Virginia Press Association.

Don Smith is executive director of the West Virginia Press Association.