Create a credit against the severance tax to encourage private companies to make infrastructure improvements to highways, roads and bridges in this state
House Bill 2716 creates a new West Virginia severance tax credit for eligible taxpayers that make qualifying investments in two areas: road or highway infrastructure improvement projects and coal production and processing facilities. For road and highway projects, the credit is tied to expenditures such as labor, materials, services, donated property, and related construction costs, but only after the project is certified by the Secretary of Transportation. For coal facilities, the credit applies to qualified investments in mine infrastructure and equipment, including haulroads, ventilation structures, shafts, preparation plants, loadouts, and machinery such as miners, conveyors, and shuttle cars.
The credit equals 50% of qualifying expenditures or investments, but it may be used only against up to 20% of a taxpayer’s annual severance tax liability in a given year. Unused credit may be carried forward for up to nine subsequent taxable years, after which it is forfeited. The bill also allows credits to transfer to successor businesses in certain reorganizations or sales, and it imposes recordkeeping, forfeiture, and reconciliation requirements if property is disposed of or ceases to qualify before the end of its useful life.
The bill would add a new article to the West Virginia Code governing a severance tax credit for infrastructure and coal-related capital investment, affecting taxpayers subject to the severance tax under chapter 11, article 13A. It would also create a certification process administered by the Secretary of Transportation for road and highway projects, including a cap of $100,000 in certified road-infrastructure expenditures statewide, and would give the Tax Commissioner authority over the coal-facility investment rules, useful-life determinations, and enforcement of credit recapture and documentation requirements. The bill would apply to tax years beginning on or after January 1, 2025.
The bill appears generally favorable in purpose and framing, with the stated goal of encouraging private investment in roads, bridges, highways, and coal production infrastructure while promoting economic opportunity in the state. The bill text and note emphasize economic development, infrastructure improvement, and support for coal-related capital investment. No committee transcripts or recorded votes were provided, so there is no additional evidence of opposition or support beyond the bill’s stated policy rationale.
The main policy tension is between using severance tax credits to incentivize private infrastructure spending and the potential reduction in tax revenue, especially because the credit is tied to coal industry investment and can be substantial relative to qualifying expenditures. Another point of possible contention is the administrative structure: road projects require prior certification by the Transportation Secretary, detailed applications, and a statewide cap on approved expenditures, which may raise questions about access, fairness, and implementation. The coal-facility provisions may also draw scrutiny because they extend tax benefits to a fossil-fuel sector and include broad categories of equipment and facility costs.