Two Eastern Kentucky lawmakers have pre-filed a bill for next year’s legislative session that would redirect 100 percent of coal severance taxes back to coal producing counties. This is the second year the representatives have introduced the bill.
In Kentucky, every ton of coal that’s produced is taxed. That severance tax goes into the state’s general fund. Half of it stays there. The other half goes back toward projects in individual coal-producing counties, or toward multi-county projects that theoretically benefit coal counties.
During the last fiscal year, about $230 million came into the state coffers from the severance tax. That’s about 22 percent less than last year, mainly due to declines in Eastern Kentucky coal production. (But it’s also interesting to note that as recently as 2004, the state’s total severance tax revenue was only $150 million.)
Those declines have also lead to more coal layoffs in Eastern Kentucky, and state Representative Leslie Combs says those counties need the money more than ever. She and a colleague have pre-filed a bill to distribute all of the coal severance revenue back to coal-producing counties.
“While we truly understand the predicament this will put the general fund in, at the same time, it’s taking our tax base and our revenue source and it’s spreading it out across the rest of the state, where we can’t support ourselves,” she said.
Combs says the three counties she represents in Eastern Kentucky have lost about three thousand coal mining jobs since November. While other areas of the state have larger tax bases, she says rural areas need more severance tax money to help make ends meet.
“So we’re sitting here trying to make a point, that our rural counties, this is their tax base,” she said. “This is their revenue source. And they need every dollar of it that they can get back. Do we truly want to damage the general fund? No. But the entire commonwealth has to understand what we’re up against here.”
She doesn’t expect the bill to pass in its present form, but Combs said she hopes to get the conversation going.
Kentucky doesn’t currently have any sort of endowment, or future fund, for its coal counties like some other states have established. Funds like the ones in Alaska, New Mexico and Wyoming take a percentage of the revenue from natural resource extraction and set it aside for the day when the natural resources have run out. Combs said she’d be open to talking about establishing a similar fund in Kentucky.