West Virginia lawmakers in the House Energy Committee Tuesday voted to advance a bill that would provide tax credits to companies that store and transport a valuable byproduct of natural gas production.
House Bill 4421, the “Natural Gas Liquids Economic Development Act” would create a new tax credit for companies that store and transport natural gas liquids, or NGLs. These products of natural gas drilling include propane and ethane, which is a feedstock for chemical and plastics production.
The committee noted 12-9 in favor of advancing a committee substitute for the bill.
Under the proposal, eligible taxpayers could opt to deduct ad valorem property tax paid on the value of inventory and equipment from owed personal income or corporate net income tax.
Some lawmakers raised concerns about the cost of the bill. The fiscal note attached to the proposal only noted that in total, West Virginia businesses collectively pay more than $400 million each year in local personal property taxes, mainly on machinery, equipment and inventory.
No specific figure was given on how much the proposed tax credit may cost the state.
“Essentially this is a small step toward the storage hub,” said committee counsel Robert Akers, in reference to the Appalachian Storage and Trading Hub, a multi-billion infrastructure project that would include underground storage of NGLs. Proponents say the hub will facilitate the growth of the plastics and petrochemical industry in the region.
In addition to developing the tax credit, the bill also includes language that denotes the West Virginia Legislature’s support of boosting NGL production and the growth of supporting industries.
That drew questions from Del. Mike Caputo, a Democrat from Marion County.
“Where did we get this information?” he asked. “Or is this something someone drafted?”
The bill will go next to the House Finance Committee.