THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, February 16, 1996 TAG: 9602160540
SECTION: FRONT PAGE: A2 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 61 lines
Legislation quietly moving through the General Assembly would triple a proposed tax credit for coal producers.
Coal companies say they need the credit - estimated to cost $142 million over six years - to slow the steady ebb of coal production and employment in Southwest Virginia.
``We're running out of the thicker (coal) seams, so this is an incentive to keep guys mining,'' said Tommy Hudson, director of the Virginia Coal Association.
Critics, however, argue that the tax credits amount to corporate welfare that, at best, will save a few hundred mining jobs in the next five years.
``They would be spending a lot of money for nothing,'' said Rob Shinn, a lobbyist for CSX Corp., the rail company that carries West Virginia coal.
Coal means money for Hampton Roads, too: Through November, 47.4 million tons of coal had been loaded in 1995 through the region's three terminals.
There has been surprisingly little debate on such a major expansion of the coal tax credit. The House of Delegates gave the bill preliminary approval Thursday without comment. A final vote is today.
A legislative study completed last year concluded that beefing up tax credits would stabilize Virginia's coal industry, which has passed the midway point in coal reserves.
Production has declined from a peak of 46.5 million tons in 1990 to 38.8 million tons in 1994. Direct employment has dropped from 10,797 in 1991 to about 7,600 today.
The study concluded that tripling the coal-tax credit would keep employment steady through 1999.
The Assembly enacted a coal-tax credit last year, but there was little scrutiny because the bill included a clause that virtually assured there would be no funding.
This year's bill - sponsored by House Majority Leader C. Richard Cranwell of Vinton - skirts the funding issue by delaying payment of credits earned this year and next until 1999.
The credit would be based on coal-seam thickness: The reward would increase as companies mined more marginal reserves. A company's employment level also would be factored into the equation.
A controversial provision would allow companies that do not show a profit to redeem the credit at 95 cents on the dollar or sell it to another corporation.
Gov. George F. Allen has yet to take a position on the bill, a spokesperson said Thursday.
Coal companies contributed nearly $80,000 to General Assembly candidates last year. The biggest contributor - United Company of Bristol with $30,400 - would be one of the biggest beneficiaries from the coal-tax credit expansion. The company's reserves tend to be in thinner seams, Hudson said. MEMO: Staff writer Lise Olsen contributed to this report.
KEYWORDS: GENERAL ASSEMBLY TAX CREDIT COAL by CNB