More support for a severance tax permanent fund

Earlier this week, the Lexington Herald-Leader printed an editorial in support of a permanent fund for the coal severance tax titled “Raise coal tax, spend it better.” You’ll definitely want to click that link to read the whole article, but here are some of the highlights: The legislature put into law some reasonable expectations for local severance tax spending. But the legislature routinely exempts itself from its own laws. In the current state budget, lawmakers approved 792 exemptions allowing them to make individual severance tax appropriations, many of dubious value. This spending nibbles up the money while bearing no resemblance to a coherent economic strategy…. When the legislature began sending half of the severance tax back to coal communities, the goal was to spur economic development and work-force training that would relieve the dependency on a single industry. Sadly, it hasn’t worked out that way. Coal production declines and layoffs — which had been predicted — are having devastating effects…. Still, the whole state has an interest in Eastern Kentucky doing better. The only way to make a case for sending more money to the mountains is by tying it to a credible regional strategy, one with measurable goals and rigorous accountability, that would be administered transparently and nonpolitically. Lawmakers from Eastern Kentucky hold the top posts in both chambers, so lack of political clout is not the region’s problem. What’s missing is a plan. We couldn’t agree...

Two editorials on coal severance funds

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...