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Speaker Stumbo, judge/executives call for greater local share of coal severance money

FRANKFORT – Noting the “bad predicament” that counties in the Eastern and Western coalfields are in because of steep declines in coal severance revenue, House Speaker Greg Stumbo joined with more than a half-dozen county judge/executives today to urge legislators to let these counties keep a greater share of that money.

Speaker Stumbo, who represents Floyd and Pike counties, told the House Appropriations and Revenue Committee that monthly coal severance revenues dropped from $20.5 million in January 2011 to just $8.9 million last month.  That’s the lowest monthly total the state has seen in two decades, he said.  Under a long-standing formula, half of the money goes to the state, while the counties split the other half.

Since the start of the fiscal year last July, total coal severance revenues have declined by more than 27 percent over the previous fiscal year.  In some coal counties, the amount of coal and mineral revenues are 80 percent lower than they were seven years ago; in Knott County, that reduction is more than 90 percent.

“I know it is too much in one budget cycle, but the state should start to wean itself off of coal severance revenue and let the coal counties keep more of what they generate,” Speaker Stumbo said.

In their testimony, the judge/executives detailed how many programs and departments they have had to cut.  In Letcher County, the senior citizens center is only serving a fourth of the eligible population; others cited reductions in parks and recreation departments and a decline in core services like fire, police and ambulance.  One pointed out that state-mandated requirements like jailing those charged but not convicted of state crimes was a cost becoming tougher to handle.

In Lawrence County Judge/Executive office manager Michelle Miller said she and treasurer Sabrina Cantrell took part in a budget meeting today.  “There has not been a huge drop in coal severance tax monies here,  but nearly every other state fund has been cut,” Miller said. “We understand that Governor Bevin has a lot of expenses to make up for but he is going to have to slow down a little so the counties can adjust to it.”

“If something isn’t done, our county will go out of business,” Webster County Judge/Executive Jim Townsend said. 

Those serving on the committee, which is currently working on the state’s two-year budget, were sympathetic.  Rep. Jim Wayne, whose district is in Louisville, said, “We are all one family in this state,” adding that his community grew into an economic engine in large part because of Kentucky coal.

Rep. Mike Denham said his northeastern district, which is partially along the Ohio River, has 2,500 jobs dependent on the coal industry. “When the Eastern Kentucky counties start to hurt, we will soon start to hurt,” he said.

Rep. Leslie Combs, who represents Pike and Letcher counties, said the drop in coal severance money has made it tougher for the coal counties trying to diversify.  She noted she had supported earlier efforts to move more coal severance money back to the counties and was hopeful the process could begin this budget cycle.

Chamber of Commrerce, GOP members see it differently

A ‘Fiscally Responsible’ Approach (KET MONDAY NIGHT)

…But while lawmakers can agree on some points, the real debate begins over how much money to allocate, where will it come from, and what other sectors of state spending will take a hit in the process.

A panel of legislators and representatives from policy advocacy groups explored those questions on Monday’s Kentucky Tonight on KET. The state budget discussion featured Senate Appropriations and Revenue Committee Chair Chris McDaniel (R-Taylor Mill); Rep. Tommy Thompson (D-Owensboro), a member of the House Appropriations and Revenue Committee; Kentucky Chamber of Commerce President and CEO Dave Adkisson; and Jason Bailey, executive director of the Kentucky Center for Economic Policy.

The spending plan presented by Gov. Matt Bevin allocates about $1 billion to the public employee and teacher retirement systems over the next biennium. His budget also maintains basic funding for K-12 education and Medicaid, and provides modest increases to several line items, including pay raises for social workers as well as state police and correctional officers.

Every other area of state government from higher education to health and human services would face 9 percent cuts under Bevin’s proposal. Overall the plan would trim about $650 million of spending.

“I think it’s the most fiscally responsible and conservative budget we’ve seen in a over a decade in this state,” says Dave Adkisson.

The Kentucky Chamber president calls Bevin’s budget a “game changer” and credits the governor with going far beyond his expectations to address the massive pension debts. Sen. Chris McDaniel adds that the spiraling costs of Medicaid payments and the retirement systems now consume nearly a third of the state spending.

“The citizens of the commonwealth are on the hook for $38 billion in unfunded pension liabilities,” says Sen. McDaniel. “It has and will continue to squeeze every other sector of government.”