FRANKFORT — When coal production declines, so does the amount of coal severance tax dollars generated from mining. The level of funding Kentucky receives from coal severance tax money has taken a drastic hit. Five years ago, the state averaged about 20 million dollars per month in coal severance revenue. Last month, about 9 million dollars was all Kentucky earned. With more layoffs slated for this spring, the situation could get even worse.
In Perry County, the circumstances are no different. Coal severance funds for Perry County reached an average of nearly 4 million dollars per year for a good stretch of time. Now, estimates show that dollar amount dropping well below one million; perhaps even half a million. The result could be catastrophic to local government funded services.
Leaders of Kentucky’s coal producing counties gathered alongside House Speaker Greg Stumbo at the General Assembly in Frankfort on Feb. 23 to call for action from Kentucky’s Legislature. Perry County Judge Executive Scott Alexander was among the coal county leaders present that day. Alexander has acknowledged the issue of dwindling coal severance money during his first year in office. Seeking grants is one method he has pinpointed of trying to relieve the strain. However, most lawmakers agree that very few strategies will be able to garner as much money as the tax itself generated in the short span of time needed to prevent major setbacks to local economies.
The coal county leaders, who addressed the General Assembly, are asking for legislation that will send a higher percentage of the coal severance tax money that remains to communities where coal is actually mined. As of now, the overall total of coal severance tax money Kentucky receives is split up among all counties, including those where no coal has ever existed. Debate over this policy began to reach a boil when 2.5 million dollars of coal severance funding was recently allocated to renovate Rupp Arena in Lexington.
Several proposals have been presented in Frankfort to try and secure more coal severance revenue for mining regions, with one suggesting that 70 percent of the state total go to the counties that qualify.
Kentucky first established a coal severance tax in 1972. At one time, Perry County was the third largest coal producer in the state. The General Assembly will continue to discuss and vote on legislature through April.
Sam Neace can be reached at 606-629-3243 or on Twitter @HazardHerald.