Two Eastern Kentucky newspapers weighed in on our declining coal severance funds last week, in response to a bill filed in Frankfort that would return all severance funds back to the coalfields. (Currently, half the funds go into the state General Fund.) While both papers support the bill, they are pessmistic about its chances of passage – and call for different thinking about severance funds and economic development in the region. The Floyd County Times calls out the Kentucky legislature for allowing severance funds to be spent not on long-term economic development, as they were intended, but for day-to-day expenses:
State law explicitly prohibits using coal-severance revenue to fund administrative functions of local government, with the money instead intended to be used to alleviate the toll the coal industry exacts on local roads and to diversify the region’s economy. However, given that much of the money is currently being spent to provide operational funding for such things as fire departments, senior citizens centers, drug courts and sheriff’s departments, it has become increasingly clear that proscription was written with a wink and a nod.
…The reality is that state legislators are allowing local governments to squander Eastern Kentucky’s future to pay for current basic needs. Instead of forcing city councils, fiscal courts and school boards to make some hard decisions about their spending choices, the legislature is instead enabling local officials to go on their merry way, pretending as if they are not beset by serious budget issues.
The Hazard Herald echoes the reality that severance revenues are declining, but goes beyond the Times and encourages Kentucky to create a permanent fund for severance tax revenues that could fund economic development well after the taxes themselves are gone (and we appreciate the shout-out to MACED’s report!):
Even if Rep. Steele’s bill is ultimately signed into law, and the coal counties receive a multitude of severance revenues, it’s still a good idea to form a trust and let these tax funds grow for future use. After all, coal will not always be around, but we can take action to help ensure needed funds will be available for the future. And if the demand for coal continues to decline, our coal counties will be in even greater need for the money such a trust could represent.
It’s encouraging to hear more coalfield media outlets calling for smarter use of severance tax funds. The Times even issues a dire warning: “There is something wrong in Eastern Kentucky. The house of cards has begun to sway. In the very near future, the day of reckoning will arrive, when the money that was supposed pay for our future can no longer pay for our present, and the opportunity to replace that revenue will have been lost.”
Now will our legislators listen?
