Daily Independent (Ashland, KY)

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December 10, 2013

Coal severance funds have gone lot of directions

FRANKFORT — It was supposed to be different. When Kentucky started sending half of its coal severance taxes back to coal-mining counties, it was supposed to be used for economic development in anticipation of the days when coal would no longer dominate the coal-field economy.

That day has come, but there’s not much to show for the coal severance money that’s been spent in eastern Kentucky over the decades. Some industrial parks — some of which sit idle — and airports were built and severance funds boosted efforts to provide water and sanitary services to residents.

But, over time, the money began to be used for a lot of things hard to describe as economic development: fire trucks, flagpoles, little league uniforms, sports complexes and the operational expenses of local governments.

On Monday in Pikeville people heard how it might have been. Joe and Tony Sertich are on the Iron Range and Resources and Rehabilitation Board of Minnesota which dispenses grants for start-up businesses, helps pay out-of-work miners to develop public works and encourages tourism.

The grants are funded by severance taxes. But in Minnesota, decades ago, the money was used to establish a fund which has grown to $142 million and the grants come from the interest on those funds. They told people from eastern Kentucky they can do the same with their severance taxes, which created considerable excitement at the SOAR Summit convened to discuss ways to combat epidemic job losses in the region.

Unfortunately, Kentucky hasn’t been as farsighted.

“When the severance taxes began we had a real focused way to spend them on bringing in jobs and creating leisure opportunities,” said Dee Davis, president of the Center for Rural Strategies based in Whitesburg.

“But these rules eroded after a long period and we end up seeing little political funds that go to buy gym shoes and Little League t-shirts and police cars,” Davis said. “All that stuff is important but the idea of severance taxes was to take care of our future, not make us more comfortable today.”

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