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Assembly Extends Coal Tax Credit

April 13, 2015

By Janeal Downs
Capital News Service

To the delight of lawmakers from Southwest Virginia, the General Assembly has passed legislation to extend a tax credit that encourages electric companies to use coal mined in the state.

The House of Delegates voted 66-31 Wednesday in favor of extending the Virginia Coal Employment and Production Incentive Tax Credit. Republicans voted overwhelmingly for the measure while Democrats opposed it.

If signed into law by Gov. Terry McAuliffe, the tax credit would remain at $3 per ton of coal and would be in effect until Jan. 1, 2019.

Del. Terry G. Kilgore, R-Scott County, said the legislation would preserve 470 coal jobs. He said miners make an average of more than $75,000 a year.

“Times are extremely difficult for our coal miners and families in Southwestern Virginia,” Kilgore said in a press release. “This legislation will keep hardworking Virginians employed with good-paying jobs.”

Approved more than 15 years ago in response to job losses in the coalfields of Southwest Virginia, the coal tax credit provides an incentive for electric utilities to burn Virginia coal. It gives them a tax credit of $3 for every ton of coal they use. The tax credit is currently scheduled to expire on Jan. 1, 2017.

The legislation at issue was Senate Bill 1161. As originally proposed by Sen. Charles J. Colgan, D-Manassas, the bill sought to reduce the tax credit from $3 per ton to $2, and it left the credit’s expiration date untouched. That version of the bill passed the Senate on Feb. 5.

However, the bill was amended Monday in the House Finance Committee to move the expiration date to Jan. 1, 2019. The committee also decided to leave the tax credit at $3 per ton of coal.

Republicans further amended the bill to limit the total tax credits awarded in any year to $7.5 million. This amount was suggested by Dominion, owner of Virginia Power, the state’s biggest electric utility, with support from the Virginia Coal & Energy Alliance.

The amended version of SB 1161 is what the House passed on Wednesday. The Senate then agreed to the changes.

Both chambers also passed Kilgore’s companion bill – HB 1879. Originally, it lowered the tax credit to $2 per ton and extended the expiration date to 2022. However, the House bill had been amended to leave the tax credit at $3 per ton, extend the credit until 2019 and limit total tax credits to $7.5 million.

On Wednesday, the Senate voted 24-14 and the House voted 62-30 in favor of this amended version of HB 1879.

McAuliffe and other Democrats wanted to reduce and eventually end the coal tax credit because the state’s budget is stretched thin. Critics also say the tax credit has been ineffective.

Del. Todd E. Pillion, R-Abingdon, touted his support for extending the tax credit, and he took a swipe at McAuliffe.

“I don’t believe in kicking someone when that person is down, but apparently Gov. McAuliffe does,” Pillion said Wednesday in a press release. “I continue to stand with the members of the Southwest delegation as we work to fend off attacks by the administration on the Southwest Virginia coal industry.”

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How They Voted

Here is how the House voted Wednesday on SB 1161 (“Coal tax; limits amount of credit that may be claimed for coal employment and production incentive”).

Floor: 02/18/15 House: VOTE: PASSAGE (66-Y 31-N 1-A)

YEAS – Adams, Albo, Anderson, Austin, Bell, Richard P., Bell, Robert B., Berg, Bloxom, Byron, Campbell, Cline, Cole, Cox, Davis, DeSteph, Edmunds, Fariss, Fowler, Garrett, Gilbert, Greason, Habeeb, Head, Helsel, Hodges, Hugo, Ingram, James, Joannou, Jones, Kilgore, Knight, Landes, LaRock, Leftwich, Lingamfelter, Loupassi, Marshall, D.W., Marshall, R.G., Massie, Miller, Minchew, Morefield, Morris, O’Bannon, O’Quinn, Peace, Pillion, Pogge, Poindexter, Ramadan, Ransone, Robinson, Rush, Rust, Scott, Stolle, Taylor, Villanueva, Ware, Webert, Wilt, Wright, Yancey, Yost, Mr. Speaker – 66.

NAYS – BaCote, Bulova, Carr, Filler-Corn, Futrell, Herring, Hester, Hope, Keam, Kory, Krupicka, LeMunyon, Lindsey, Lopez, Mason, McClellan, McQuinn, Morrissey, Murphy, Plum, Preston, Rasoul, Sickles, Simon, Spruill, Sullivan, Surovell, Toscano, Tyler, Ward, Watts – 31.

ABSTENTIONS – Farrell – 1.

NOT VOTING – Orrock, Torian – 2.

Delegate Torian was recorded as not voting. Intended to vote yea.