The Kentucky Office of State Budget Director’s monthly report on the collection of taxes in the state has become a constant reminder of the faltering of the coal industry in the state.
The results for September offer no relief from that.
According to the OSBD’s report, in September, the state collected a total of $17.9 million in coal severance taxes. While that amount represents only a 20 percent decline from the amount collected in September 2012, it represents a 54 percent decline from the $27.7 million collected in September 2011.
Last year’s coal severance collections fell 22.7 percent under estimates and the total collected of $230.5 million represented a 22.1 decline over the total collected in 2011.
Those numbers are weighing heavily on the minds of legislators as they prepare to go into the January General Assembly session, which will decide, based on estimated receipts, how to allocate coal severance funding over the next two fiscal years.
Leslie Combs, who represents the 94th District, said Friday that the falling coal severance fund is a big concern not just for coal counties, but the entire state, particularly because 50 percent of the fund goes into the state’s general fund.
“Not only are we going to have to deal with it on our side of the equation, in terms of how’s this going to fund various projects and entities going forward, but also what’s this going to do to the general fund side of things, which is something all legislators are going to have to think about,” Combs said. “This doesn’t just affect us at the local levels ... it also effects the entire Commonwealth because it could create a sizeable hole in the General Fund budget.”
But, she said, answers aren’t forthcoming.
“I think we struggle with it every day trying to find solutions and the answers,” she said. “But it’s a question we don’t have an answer to yet.”
Combs, along with Rep. Fitz Steele, of Hazard, has pre-filed a bill which would return to the coal counties all the coal severance collected. Combs admits that it’s unlikely the bill would pass as-is, but that it is a starting point for negotiations.
Pike Judge-Executive Wayne T. Rutherford said Friday that the return of coal severance funds is something for which he has advocated for years.
“However, the severance tax is a state tax and we are at the mercy of the governor and the state legislature,” Rutherford said in a statement. “Only through their leadership can we receive the help we need now more than ever to get back a greater return of the money that is generated here from coal mined from our mountains.”
One of the big decisions facing legislators is the allocation of single-county coal severance. Combs said Friday she expects that will be a different type of discussion than it has been in the past.
“I’m confident we’ll have more requests than we have dollars,” she said. “We’re truly, truly investing dollars now that we have to get a return on. We obviously have to take a different approach to it.
“Every dime we spend going forward has to have a benefit and a return to it,” she said.
While they’re waiting for the legislature to meet, according to Pike County Finance Commissioner Rhonda James, Pike County is already making changes and working to meet the challenges of the current economy.
“During the last budgeting process, county government worked very hard under the leadership of Judge Rutherford and the Fiscal Court to insure a viable budget for the 2013-14 fiscal year,” James said. “It is no secret that the public and private sectors in our county and region are all facing challenging times due to the difficult period our coal industry is experiencing. We will continue to monitor revenue and adjust expenditures as appropriate.”
House Speaker Greg Stumbo, whose district was recently redrawn to include part of Pike County, said Friday he will be working to protect coal counties in the budget process.
“Despite the drop in coal severance funds I remain committed to ensuring families in our coal counties get the services they deserve,” Stumbo said in a statement. “As we move into the 2014 budget session, I am working with representatives from all the coal counties on legislation that will protect coal counties as we deal with this shortfall.”
Although there have been losses in coal severance, according to the OSBD report, the minerals severance collections were up 54 percent between September 2012 and September 2013, and natural gas severance is also up 54 percent over the same period.