January 10, 2013
Rep. Fitz Steele is on the right track, we think, about returning more coal severance funds to the state’s coal counties, and he has filed a bill that would do just that. But we would like to see his bill taken a step further and form a coal severance trust that would put back a portion of these funds for future use.
Rep. Steele’s bill will likely face tough opposition from other lawmakers outside of the coalfields. No matter how you stack it, though, Kentucky’s coal counties stand to lose a lot of money as severance receipts shrink due to a lack of demand for coal.
“I am concerned about the coal severance receipts, they are down, they’re down significantly,” Gov. Steve Beshear was recently quoted on Kentucky Public Radio. “And that because coal mining is down significantly, the tons of coal mined has dropped.”
So, we can expect a drop in severance, and coal counties in particular can expect that budgets will be slashed and planned infrastructure projects may be put on hold. That begs the question, what should be done with the coal severance revenues counties now stand to receive?
For the sake of argument, let’s assume that Rep. Steele’s bill will not make it into law. Perry County, for example, takes an expected hit in coal severance. Where will the money the county does receive go from there?
Obviously, there are still a few pockets of the county that could stand a good drink of water, and by and large our elected officials in Perry County have worked to extend waterlines to every homeowner who wants to tap on to a municipal supply. We think that should continue.
But we also think we have to begin looking into the future.
In 2011, the Mountain Association for Economic Development (MACED) released a report that urged leaders to form a trust fund from coal severance dollars that can be accessed later on for prioritized projects.
We said this was a good idea last year, and we still think so, especially in light of dwindling coal severance revenues.
Even if Rep. Steele’s bill is ultimately signed into law, and the coal counties receive a multitude of severance revenues, it’s still a good idea to form a trust and let these tax funds grow for future use. After all, coal will not always be around, but we can take action to help ensure needed funds will be available for the future. And if the demand for coal continues to decline, our coal counties will be in even greater need for the money such a trust could represent.
— The Hazard Herald