ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, February 16, 1996 TAG: 9602160033
SECTION: BUSINESS PAGE: B8 EDITION: METRO
DATELINE: RICHMOND
SOURCE: DAVID POOLE STAFF WRITER
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 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 transportation company whose railroad carries West Virginia coal.
The House of Delegates gave the bill preliminary approval Thursday without comment. A final vote is scheduled 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.
The study concluded that tripling the coal tax credit would keep employment steady through the end of the century.
The General 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 Richard Cranwell, D-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 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.
Coal companies last year contributed nearly $80,000 to General Assembly candidates. The largest contributor - United Co. of Bristol with $30,400 - would be one of the biggest beneficiaries. The company, which owns real estate in Roanoke, has coal reserves that tend to be in thinner seams.
Landmark Wire Service writer Lise Olsen contributed to this article.
LENGTH: Medium: 54 lines KEYWORDS: GENERAL ASSEMBLY 1996by CNB