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West Virginia assessors question new gas rule, look to 2022

WV Press Release Sharing

CHARLESTON, W.Va. — The Association of West Virginia Assessors has issued the following release:

The AWVA is deeply concerned with a new emergency administrative rule recently filed by the West Virginia State Tax Department that dramatically changes how natural gas and its production is valued for property tax purposes.  During their annual fall meeting late last week at Pipestem Resort, Assessors from across the state gathered  to discuss the 2021 West Virginia legislative session and bills affecting their duties.  Chief among those bills was HB 2581, which changes how taxes will be assessed on natural gas production for the next several years. 

Earlier in the week, Harrison County Assessor Rocky Romano addressed the legislature’s Joint Committee on Gas Development during interim meetings in Charleston where the emergency rule was discussed.  There, representatives from the oil and gas industry and the WV Tax Department joined Romano in presenting arguments over problems with the rule.  “This is the first time that the Assessors’ Association has had a say in this,” Romano said during comments.  “When the Assessors don’t have a say, our county commissioners haven’t heard anything either because they get their information from the assessors in each county.”

County assessors have the responsibility of annually evaluating, “assessing” the values of all natural resource properties.  Those assessments are then sent by the sheriff to residents and businesses who own those parcels of property for annual property tax payments. 

For several years now, industry representatives have introduced legislation to change natural gas valuation, claiming rates were too excessive and limited expansion of gas production.  In 2020, the legislature considered SB 655, which would have reduced county revenues by nearly $70 million.  This year, HB 2581 held the same amounts, but was greatly reduced by the end of the session as several legislators acted out of concern that the cuts were too onerous on counties, many who struggle with decreasing revenues.  Leading that effort was Sen.  Charles Clements (R-Wetzel).  “We really appreciate the support by Sen. Clements,” said Assessors President, Dustin Zickefoose from Upshur County.  “County revenues are tenuous, and quick, major changes create havoc for assessors and tax payers.  We need reliable, stable numbers to more easily set our budgets.”

The stability of property tax revenues, which provide funding for county government and education services, is undoubtedly something Assessors fear will be jeopardized with implementation of HB2581.  Traditionally, the State Department of Tax used a 3-year market rate for gas production values which resulted in less volatility.  “2581 changes that in a major way.  Now every year we will have to calculate with numbers that might swing wildly rather than absorbing volatile markets in a 3-year table,” Romano explained to legislators during the Monday hearing.  

Another question raised by assessors:  during the session, State Tax provided estimates on the change in revenues to counties.  But counties have yet to see figures since the passage of 2581. Upon questioning by Del. Lisa Zukoff (D-Marshall), Tax stated on Monday they would provide those new figures soon and would again review concerns raised by assessors at the hearing.  

Finally, assessors claim that the new valuation method fails to consistently apply appropriate methods in deriving the declining terminal income series. Specifically, it fails to account for declining income values for gas production over time.  Numbers would not reflect this declining value and tax rates would be incorrect, resulting in extreme fluctuations for taxpayers’ assessments. 

Upon concluding their meeting, assessors look to the following items for the 2022 session:

  • Support of a “well-deserved and long overdue pay raise” for county officials                 
  • A bill calling for targeted audits of utilities and their property assets
  • Oppose changes to tax laws that result in loss of county revenues

“We feel strongly about these issues and the importance of their success, which means success for West Virginia,” explained Zickefoose.  “And we ask that our state government officials include us in their deliberations on issues around property tax and the tax assessments process.  They certainly worked closely with industry without including the group most responsible for achieving tax fairness for West Virginians – – West Virginia County Assessors,” he continued.  “We welcome everyone to come to our Assessor’s offices around the state and see how hard we work, how well we work on behalf of all taxpayers.”     

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