Where Should Coal Severance Money Go?

Two Eastern Kentucky legislators have pre-filed a bill in Frankfort that would send all coal severance funds back to coal-producing counties. Eastern Kentucky local governments have been seriously struggling to get by as the coal industry declines in the region, so this money would mean a lot. Currently, half of severance revenues go into the state's General Fund, with the other half going back to coal counties in a rather convoluted path through multiple funds with different allocations and stipulations for use. Though plugging holes in county budgets wasn't the intention for the severance tax, it's increasingly been used that way as shortfalls have grown larger. (At the same time, severance revenues from Western Kentucky have increased as the coal industry there is growing.) According to a report from news outlet cn2:

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.

So it's not surprising that Rep. Leslie Combs, from Pikeville, and Rep. Fitz Steele, from Hazard, would propose such a bill. Shouldn't coal counties get the severance taxes they've earned, especially when they are suffering financially? On the other hand, the state General Fund provides critical social services that benefit eastern Kentucky, along with the rest of the state. Child care assistance, higher education and mental and public health programs have seen steep budget cuts already. Losing coal severance funds, which last fiscal year amounted to over $100 million, would only exacerbate our already precarious budget situation. 

It's a question without an easy answer, and the bill's chances of passage are slim. But it's a conversation well worth having. 


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