County budget faces serious issues

With coal severance down, budget management is key

Courtesy photo

HAZARD — During a special called meeting of the Perry County Fiscal Court on May 3, Judge Executive Scott Alexander asked the Hazard Herald to review a report he created, which details the dollar amounts Perry County has received from severance tax over the course of the past seven years. All of the information in the report has been reviewed. This is the Hazard Herald’s article about the situation.

For the 2016 fiscal year, Perry County received slightly more than one million dollars ($1,051,155.13) from the coal severance tax and a little bit more than one third of a million dollars ($345,324.61) from the mineral severance tax, which is provided mostly by companies that extract natural gas in Perry County. The total severance tax revenue for Perry County in the current fiscal year equals close to one and a half million dollars ($1,396,479.74).

Out of the past seven years, 2011 was the best in terms of severance tax money generated. Perry County collected an overall total of more than three million dollars ($3,726,312.31) for the 2011 fiscal year. The worst year on record out of the past seven is 2016. The difference between the best year and the worst year measures out to more than two million dollars ($2,329,832.57).

The fiscal court accepted the first reading of the 2017 budget for Perry County by unanimous vote at the May 3 meeting. No details were given as to how much money is in the budget or ways the money in the budget will be divided to help pay for the county’s needs. However, Judge Alexander did speak in regards to Perry County’s finances and the cuts to services that have already been delivered.

“Some of the things we’ve already done,” Alexander said, “We’ve cut healthcare some last year. We had to cut some of what we spend at the jail. We’ve cut seniors. If we hadn’t made some hard cuts, and they was hard, we’d be in a financial crisis right now.”

Alexander also talked about a possible decrease in money coming from outside funding streams and the ramifications such a decrease could have on a county budget that is already lingering near crisis.

“There’s no way to come up with new money to pay for new cost. The next thing to start cutting is employees and we’re trying to do everything we can to not do that.”

Coal severance money has been on a rapid decline in Eastern Kentucky for nearly a decade. Severance tax money coming into Perry County has steadily decreased every year since 2011. In 2013, Perry County’s budget suffered a loss of close to one million dollars ($805,377) in comparison to the severance tax revenue that was generated in 2012.

Yet in 2013, many of Perry County’s services that were accustomed to receiving coal severance money every year were still able to obtain monetary help and, as a result, those services managed to stay afloat. With another large decrease in severance tax money occurring this year, citizens in the community are paying attention to how money in the budget is spent and they are concerned about what services might suffer from cuts in funding. Few places are more apprehensive than the volunteer fire departments in Perry County because they have been regular recipients of coal severance funds in the past.

To sum the severance tax situation up briefly, Perry County’s annual budget is almost two and a half million dollars poorer than it was in 2011. Perry County’s budget for 2016 lost more than one million dollars ($1,159,263.76) in comparison to the 2015 budget. When funding cuts this deep occur, the issue becomes budget management. Some key questions moving forward are: Where will money in the budget be spent, and why is it being allocated in such a manner? Will budget management prevent actions, such as an increase in property taxes?

The next budget for Perry County will be placed into action on the first day of the fiscal year, which is July 1. Between July 1 of 2016 and June 30 of 2017, the story will be told of how deep these cuts truly run, which county services might be affected and how competently the budget is managed. The next Perry County Fiscal Court meeting has been scheduled for May 24.

Sam Neace can be reached at 606-629-3243 or on Twitter @HazardHerald.

Courtesy photo photo
With coal severance down, budget management is key
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