August 31, 2012
HAZARD – Fire departments in Perry County got a boost after coal severance funds were distributed to aid in their efforts throughout local communities, but legislators this week cautioned that a decline in the coal industry may hamper future payments.
Coal severance is a tax levied on every ton of coal produced in Kentucky. Some of the money collected from the tax goes back to the counties where the coal was produced, and is meant for projects such as infrastructure development. In Perry County, coal severance has helped pay for waterline extension for several years, and for the past six years money has been allocated for local fire departments.
Representatives from most of those departments attended a special called meeting of the fiscal court on Thursday, during which they each received checks for $10,000 to cover certain costs. According to Steve Argonis with the Lost Creek Volunteer Fire Department, these funds are vitally important by ensuring that his department can continue to make payments for a piece of equipment sorely needed for a fire department to fulfill its mission.
“We needed to purchase a few years ago a new rescue truck and mini pumper,” Argonis noted. “In making payments on that, coal severance is really a great benefit to help us to make the payment on the truck and still have enough money left over for all the operational expenses that we have.”
At Thursday’s meeting in Hazard, state Sen. Brandon Smith addressed department officials and noted that these funds were allocated based on requests from members of the fiscal court. He added that helping volunteer departments pays more for the taxpayers than just ensuring that a community has a department.
“By having a volunteer department in the area, it lowers the insurance rates (for homeowners),” Smith said. “It’s more than just a good thing for safety.”
While department administrators will be able to utilize a new round of funding, and are set to receive another round of checks next year, it’s the year after that officials say counties could begin seeing a cut in the amount of coal severance they receive. In fact, state officials in Frankfort have already made note of an early decline in severance funds.
Kentucky’s budget director Mary Lassiter told legislators in July that the state’s financial outlook is good, all with the exception of coal severance receipts, which were down for the year. She said the state took in more than $28 million less than expected in coal severance.
With the local coal industry continuing to decline this year, Smith said he understands that coal counties will begin to see cuts in the amount of coal severance they receive because several mines in the region have been shut down or idled, resulting in reduced production.
“We’ve been able to help them this year because we could allocate some coal severance money,” Smith remarked. “With the idling of these mines and shutting the mines down, they’ve cut the coal severance money that’s available. So we don’t know if we’re even going to be able to do anything like that next year of the year after.”
Sen. Smith said the decline in funds may continue after next year, and referred to the “war on coal” in which some say heavy-handed federal regulations have caused coal mines in Appalachia to shut down. Others contend that market conditions have been responsible for the slowdown.
“We’re going to see some serious cuts in our area because they’ve idled 312 mines here in the last two years,” he said. “That means the production’s not there, the money’s not there, so it’s important.
“The war on coal has casualties that people didn’t realize before, and I’m afraid that departments like these are going to wind up being one of them.”
State Rep. Fitz Steele also attended Thursday’s meeting, and noted that both he and Sen. Smith have met with their leadership in the House and Senate respectively, and requested that any cuts made to the coal severance fund be made off the top to taxes that go into the state’s general fund, rather to single county projects.
“The state, they take it in the general fund and spread it to a bunch of different areas,” Steele said. “Hopefully we can work to do a cut across the board where it’s going to protect our coal-producing counties.”
Rep. Steele and Judge-Executive Denny Ray Noble went on to thank local coal miners for their work in producing the coal that in turn produced these severance taxes. Judge Noble added that funds distributed this week to each of the fire departments play an important role in keeping communities safe.
“Perry County is very, very lucky to have volunteers,” Noble said. “They get out there in the night, if a tree’s in the road or somebody is sick, and get there before the ambulance service gets there, and they can save a lot of lives.”