Two lawmakers want coal severance money to stay in counties as officials fret over declining funds

07/11/2013 04:14 PM

As shrinking coal severance tax funds pinch local governments in Eastern Kentucky, two legislators from the region have proposed changing the law to increase coal counties’ share of that revenue.

Coal severance taxes paid by mining companies for the wear and tear on the environment and infrastructure have dropped from $298.3 million in Fiscal Year 2012 to $230.5 million in 2013 – a 22.7 percent decline.

The industry is slowing down from it’s peak in the 1990’s, especially in Eastern Kentucky, as federal regulations and competition from natural gas have squeezed the coal industry. Production has fallen from a height of 173 million tons in 1990 to 91.4 million tons last year.

Many counties where coal is mined and transported have come to rely on severance funds to pay for its public services like trash pickup and operating water and waste treatment plants and even paying the utility bills for county courthouses.

Letcher County Judge Executive Jim Ward told lawmakers that effect of the severance tax decline on his county has been tremendous.

“We’re trying to figure out how we’re going to keep services up just to the general public,” Ward said.

Rep. Fitz Steele, D-Hazard, and Rep. Leslie Combs, D-Pikeville, on Thursday pre-filed legislation for the 2014 General Assembly that would allow coal-producing counties to keep coal severance tax dollars.

Currently half of coal severance tax dollars goes into the general fund for projects, while the other 50 percent goes to coal producing counties for services and coal transportation counties for road projects.

“Our coal counties are hurting, and if they are going to survive, they need this money. They’ve certainly earned it,” Steele said in a statement.

Both Steele and Combs sponsored a similar bill during the 2013 regular legislative session but said it will be more relevant next year when the General Assembly adopts the state’s two-year budget.

Bill Bissett, president of the Kentucky Coal Association, outlined to legislators at Thursday’s meeting that the decline is caused by several key factors.

Bissett did say he was encouraged that the president’s pick for U.S. secretary of energy, Ernest Moniz, is someone who has been supportive of fossil fuels in the past. However, question marks still remain about the next EPA administrator, who has yet to be confirmed by the U.S. Senate.

Several lawmakers at Thursday’s meeting wanted to know what they can do to help the coal industry.

But one Northern Kentucky legislator, Democratic Rep. Arnold Simpson of Covington, said he’d have a tough time sending more state general fund dollars directly to coal counties to help.


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