Coal Severance Tax

Posted: 6/01/2006 by Floyd in Labels:

Excerpts from a commentary by; Senator Ray Jones of District-31
This tax was created in the legislature,and it's important to remember that the General Assembly can change the way funds are distributed if it so chooses. But that never stopped Governors from trying to impose their will on the system,as evidenced recently by Governor Ernie Flecther's inapproiate vetoes of coal severance projects across the state.
The tax was first enacted by the legislature in 1972,and all of the funds five percent levied on every ton of coal mined in Kentucky went into the states General Fund to be used for projects statewide. In those days,Governors exerted far more influence over the General Assembly than they do today.
The statewide distribution of the tax made the citizens of coal-mining counties in Eastern and Western Kentucky scratch their heads. After all,coal severance revenue is literally earned on the backs of local miners. Furthermore,it's local people who pay the price of living with the coal industry,for example the toll it takes on the environment or the roads. We all realize how dangerous the mining industry is.
In 1992,under the leadership of former Governor Brereton Jones and Lieutenant Governor Paul Patton,20 years after the tax was first enacted,the General Assembly passed a law that required Frankfurt to gradually increase the amount of coal severance tax revenues it sends back to coal counties. By 1996 the law called for 50%,which seems fair.
However it wasn't until 2004 that we sort of reached that 50%. But that happened despite Governor Flecther,who has repeatedly tried to raid the 50% in local funds and transfer a larger portion to the state's General Fund for state wide needs.
Now Governor Flecther has found a new way to keep Frankfurt in control of local coal severance tax funds. He vetoed the local coal severance projects local legislators wrote into the budget.
Now instead of working with local legislators,county judge-executives will have to apply to some Frankfurt bureaucrat for coal severance dollars. City officials will have to go to County officials,who will then go to Frankfurt bureaucrats---cities have two hoops to jump through. That's a particularly silly requirement in Pikeville,where there are two active coal mines within the city limits.
I don't know what kind of yardstick these Frankfurt bureaucrats will use to measure the importance of projects,although administration officials have indicated a focus on economic development projects. Why,then,did the Governor veto several significant economic projects the legislature put into the budget for Pike,including $1 million for the Marion Branch Industrial Park and $1.5 million for a research and development institute at Pikeville Medical Center?
Futhermore,I am quite concerned about how fair the Governor will be in the distribution of coal severance funds. Flecther left in the budget $3.4 million in projects funded with coal severance dollars for Butler County,a county that produced no coal last year,but one that is represented by Flecther's fellow Republicans in both the House and Senate.
Link; Inside this blog

It's simple: coal counties pay the price of living with mining,coal counties should benefit from coal mining taxes. That's local citizen's who should benefit,not Governor Flecther's re-election campaign.


  1. What does our new governor plan to do with coal severance tax?

    B. Duncan

  1. Floyd says:

    PDF Document

    It looks as though it will be put to use in the education field and sewer line and road improvements, it has been awhile since I've been blogging but hope this helps,,thanks for the comment and drop by anytime.