Proper projects or just plain pork? Philosophical fight looms over coal severance tax spending

03/20/2014 11:27 PM

Before the 2014 session even began, Republican Senate President Robert Stivers issued a wish, or perhaps a warning, about spending coal severance tax money in some of the poorest counties in the state.

“The House — both Democrats and Republicans — need to be more disciplined in the way they use severance tax. No more flag poles. No more trophy cases and things of that nature that have limited seasonal use,” he said in a Dec. 18 interview with Pure Politics.

Stivers favors pooling money together in each county to make bigger, potentially longer lasting investments in water and sewer projects or paying off economic development ventures.

But the two-year spending bill the House sent the Senate last week contains 39 pages of projects for counties. Some of the counties do what Stivers want. Others are seeking to spread the money around in dozens of line-items that include projects like $70,000 for a Mountain Sports Hall of Fame in Floyd County, $20,000 for music festivals in Henderson, $10,000 for the Menifee County Actors Guild and $5,000 for the Christian Life Fellowship food pantry in Knox County. (More on that later in the article).

Over the next two years, 32 counties are slated to receive coal severance tax revenue, which is paid by mining companies for the use of land and wear and tear on roads and resources for transporting coal out of the region.

Amounts of funds going back to the counties depend on the level of mining activities within the county. So the the totals vary about as much as the way local officials wish to use the funds.

For example, many counties spread out the funds in a few thousand dollar chunks to city agencies or fire departments or programs like senior centers, youth sports leagues and food pantries. Other counties consolidate money to make big-ticket purchases, like water lines or debt payments. Some counties do a mix of both.

Sen. Robin Webb, D-Grayson, said there are merits to both approaches and defended the financial shotgun approach, saying that counties that don’t get as much coal severance tax money can’t achieve what Stivers wants because there’s simply not enough money:

Some examples of the different approach include:

  • Knott County is slated to get $1.53 million over the next two years. And the budget bill calls for that go to five line items, including $100,000 to pay off bonds on the county jail and $800,000 to make a bond payment on the Knott County Sportsplex. That’s $200,000 more than the $600,000 that’s due in 2016 so the debt can be paid down faster, said Rep. John Short, D-Mallie.
  • Floyd County, home to Democratic House Speaker Greg Stumbo, gets to spend a similar amount — $1.58 million over two years — but on more than eight times the numbers of projects (42 total) as Knott County. The House version of the budget lists 17 fire departments each getting $3,500 over two years. The Mountain Sports Hall of Fame gets $35,000 a year. And even the Wheelwright Gym is slated to get $5,000 for operating expenses.
  • Harlan County is one of the biggest coal producing counties and is slated to get more than $3 million over the next two years. It took a hybrid approach, with nearly half of the money go toward paying off the county’s bonded debt. The rest is spread out among 36 other line items, including $10,000 each year for six cities to cover operating expenses.
  • Bell County, meanwhile, divides its $1.44 million pot into three categories: $100,000 for projects in Middlesboro, $50,000 for Pineville projects and $1.29 million for county projects.

Rep. Rick Nelson, D-Middlesboro, represents all of Bell County and part of Harlan County. He said the different approaches comes from the needs and requests of county officials. In fact, he said he and Rep. Fitz Steele, D-Hazard who also represents Harlan County, simply submitted the Harlan County officials’ requests when going through the budget process.

Nelson said he doesn’t see a problem with spreading out cash to what he called “quality of life” programs like senior centers, little league programs and park improvements. He said Bell County normally would request line items like that.

But with coal severance tax revenue shrinking as the coal mining industry contracts, he said counties simply need the money to fill in budget gaps for basic operating costs and necessary equipment purchases.

One spending project that is likely to be hotly debated among Senators is a line-item from Knox County — one of the counties Stivers represents in the Senate.

Included among the 22 line-items for $505,000 worth of spending over the next two years is $5,000 for the Christian Life Fellowship food pantry. And that could raise a red flag for senators who are conscious of what the courts have ruled regarding appropriating tax money to privately-run organizations.

The Kentucky Supreme Court ruled that it was unconstitutional for the legislature to tag $11 million in coal severance tax money as part of the budget in 2006 for a pharmacy school and scholarships for the privately-run University of the Cumberlands.

Rep. Jim Stewart, R-Flat Lick, represents Knox County. He was one of only two Republicans to vote for the spending bill that contained those projects. And he declined to submit to an interview with Pure Politics reporter Don Weber on Thursday about the projects and the food pantry.

The Christian Life Fellowship food pantry has been the only U.S. Department of Agriculture food pantry in the Barbourville area and serves 4,300 people a month, the Corbin Times Tribune reported in August 2008 .

Christian Life Fellowship, Inc., in Barbourville is listed in business filings with the Kentucky Secretary of State as a non-profit organization that first formed in 1983 by Rev. David Shelton.

Webb, a lawyer and former vice chairman of the budget committee while she served in the House, said she believes food pantries could “pass constitutional muster” as long as they are open to the community at large and don’t just serve members of a particular congregation.

The Senate is expecting to pass its revised version of the budget by the middle of next week. That would give four or five days for negotiations between House and Senate leaders to hammer out a compromise of the budget in time to send it to the governor and get it back in time to override any vetoes. April 2 is the last day the General Assembly could pass a bill and be able to overturn vetoes on the final day of the session, which ends April 15.


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