Virginia governor vetoes coal tax credit extension

OREANDA-NEWS. Virginia governor Terry McAuliffe (D) has vetoed legislation extending the state's tax credits for coal producers and users by two years.

McAuliffe vetoed the bill on 30 April, saying the incentives have not had the desired effect of supporting coal mining employment. Lead sponsors of the bill and the Virginia Mining Association did not immediately return requests for comment.

The incentives, which expire next year and were enacted in 1995 and 1999, give producers a credit against taxes of up to \\$2/short ton for coal mined within the state and utilities \\$3/st for coal they purchase in-state. Between 1988 and 2014, companies claimed more than \\$573mn in credits but coal-mining jobs have fallen by more than two-thirds, to 3,600, McAuliffe said.

"The extension of these tax credits without meaningful reform is inconsistent with these findings," McAuliffe said.

The past years' weak metallurgical and thermal coal market conditions have been especially hard on eastern producers because their mines tend to have higher production costs. Producers including Peabody Energy, Arch Coal and Alpha Natural Resources, have projected that output from Central Appalachia, which includes Virginia, could fall to as low as 80mn st (72.6mn st) this year from about 117mn st in 2014.

Virginia's coal production sunk to 15.5mn st last year from 29.4mn st in 2006, according to Mine Safety and Health Administration data, as producers shut mines and scaled back output.