Legislature should take up severance tax endowment
If you live in Montana and you’re looking for a tool for economic development, you already have a pretty good one in place. There is currently an $800 million severance tax endowment fund available for just that purpose. In Alaska, they’re sitting on $37 billion. Other states like New Mexico and Wyoming have similar funds.
Each of these states has apparently been pretty forward-looking. Their extractive industries have helped pay for what is essentially a rainy day fund that can help provide economic development well into the future.
Can Kentucky make that same boast? Sadly, no.
In Kentucky, coal severance is pretty much used up as it comes along. Fifty percent is chopped off the top and goes directly into the state’s General Fund and ultimately gets allocated across the commonwealth. The coal counties get some of the remaining funds based on the amount of coal produced.
Apparently, however, the coal severance multi-county fund, according to House Speaker Greg Stumbo, usually has a surplus. And what exactly should we do with that money? As was the case this past year, our legislature allocated $2.5 million to help renovate Rupp Arena. And why not? After all, it was just sitting there with nothing else to do.
We have to wonder, however, wouldn’t it have made better sense to set aside any surplus for our own economic development fund? Why not just put it in a trust and let it grow, and then somewhere down the line it could be used to help develop the state’s coal counties?
This is not an original idea. It’s been floated around Kentucky for at least the past two years. We’re just wondering why no one in any position to actually do something can see the value in an endowment fund that could be used to benefit our coal counties somewhere down the line.
We do see an opportunity for that to happen. A bill pre-filed for the 2014 session of the General Assembly will, if signed into law, return 100 percent of the state’s coal severance funds to the counties where the coal was produced. For Perry County, which remains the No. 3 county in the state in terms of production, that would mean a lot of money.
But the bill filed by Reps. Fitz Steele and Leslie Combs doesn’t have a shot at ever becoming law. We believe Rep. Steele, who represents Perry County, knows full well the opposition this bill will face. The state is making its own cutbacks, and officials aren’t likely to give up their hold on severance funds any time soon. But as Rep. Steele told WYMT-TV last week, his bill will begin a dialogue en route to compromise, and we think that’s a dialogue that should be taking place.
We hope Rep. Steele’s call for compromise should be a starting point to eventually take at least this surplus Speaker Stumbo mentioned and put it back for future use. The legislature should take up the call to begin an endowment fund, and we urge our coal county legislators to begin that conversation.
Coal is in decline, and while we don’t see an immediate end to the industry (or at least we hope there won’t be one), we should be saving now for when there is nothing left to save.
— The Hazard Herald
Local Gas Prices