Gov. Jim Justice has signed into law legislation to remove a sunset provision on West Virginia gas and oil tax assessment methodology backed by the industry but unpopular with landowners and tax officials in gas-producing counties.
Justice’s approval comes a day after the coal magnate vetoed a bipartisan bill that had drawn less controversy that would have removed a sunset date for a state program designed to promote utility-scale renewable power.
Justice on Wednesday signed into law , which eliminates a sunset provision that was slated to effect July 1, 2025, allowing the current valuation procedure to continue for all future assessment years, in the absence of any significant legislation to change the methodology.
Defenders, detractors of the methodology
The current methodology’s unpopularity in gas-producing counties grew after a State Tax Division clerical error under the approach cost those counties some $30 million in property tax collection.
Industry representatives have defended the current methodology that HB 4850 extends, saying it ensures certainty for the industry and is a fair tax assessment formula.
The current procedure was established through , legislation passed in 2022 that enacted assessment methodology resulting in counties feeling greater impacts of higher gas prices.
Wetzel County Assessor Scott Lemley has said the current tax methodology results in a substantial workload that creates mistakes and has resulted in wells being valued individually rather than on a mass appraisal income model that would more fairly evaluate properties.
HB 4336 based the oil and gas well tax valuation formula on actual annual prices rather than the weighted three-year average price used in the past.
A Department of Revenue-submitted fiscal note attached to HB 4336 in 2022 said counties would “immediately feel the impact of higher pricing†when energy prices are high compared with the “smoothing mechanism†that was the three-year weighted average.
An increase in gas prices has driven up property tax assessments for gas and oil royalty owners, resulting in what the state estimated last year was a tenfold rise in the number of tax increase notices from around 7,000 to 70,000.
Scott Sonda, owner of 500 acres in Ohio and Brooke counties, said at a public hearing on HB 4850 last month the current tax methodology isn’t providing fair market value for mineral owners, yielding assessments well above what he could sell his minerals for.
HB 4850 passed the House of Delegates in a 71-25 vote following Senate approval through a 28-6 vote that came moments after Senate Finance Committee Chair Eric Tarr, R-Putnam, said the current tax assessment methodology needs improvement.
HB 5228 vetoed
Justice on Tuesday vetoed HB 5528, which would have raised the cap on how much capacity a renewable electric facility may generate and removed a sunset date on a state program designed to promote utility-scale renewable power Justice approved in 2020.
would have raised the cap on a renewable electric facility’s generating capacity from 50 to 100 megawatts. The increase would have remained in effect until 85% of the facility’s annual energy output was being sold or was contracted to be sold.
HB 5528 also would have removed a Dec. 31, 2025, sunset date on the program allowing cost recovery from renewable energy facilities.
In a letter announcing his veto, Justice said “it is very important that we are careful not to cripple our great coal-fired energy industry.â€
Justice, a U.S. Senate candidate, said “it seems†power companies serving the state are being incentivized by corporate and federal sources to “drastically reduce and eliminate†coal-fired power.
Mike Tony covers energy and the environment. He may be reached at 304-348-1236 or mtony@hdmedia
