Tuesday, May 22, 2012

As coal output falls, officials worry about severance-tax money, but Ky. scholarship idea stays afloat

Officials in Appalachian states are worried that they won't receive as much money from coal severance taxes as expected because of the predicted decline in Central Appalachian coal production, but that hasn't stopped some Kentucky officials from proposing that severance-tax money be used to pay for scholarships to colleges in the region.

Severance taxes have long been a source of consistent funding for coal-producing counties, but "with so many coal companies citing lower levels of coal sales than in years past, the amount of coal severance tax collected could be lower than normal," Bailey Richards of the Hazard Herald reports. According to the U.S. Energy Information Administration, coal production for March 2012 was "down by almost 15 percent from the past two years," Richards writes. General tax collections in West Virginia were below the initial estimate for the second consecutive month, in part because it received $16 million less in coal severance funding, The Associated Press reports.

In Western Kentucky, which has part of the separate Illinois Basin coalfield, officials in Henderson say they won't be able to complete local community improvement projects if there's a decline in severance-tax funds, reports Frank Boyett of The Gleaner.

A plan to use Kentucky severance-tax dollars for college scholarships in all coal-producing counties died in the legislature this year, the University of Pikeville and the University of the Cumberlands are trying to keep the idea alive administratively for Eastern Kentucky, the Lexington Herald-Leader reports. The schools are "vying for Gov. Steve Beshear's approval through the Department for Local Government, which distributes grants funded by coal severance money," Blackford writes.

UPike President Paul Patton, a former governor, and House Speaker Greg Stumbo originally proposed adding the school to the state system; the scholarship idea was a fallback plan. However, the plans conflict; only nine counties would benefit from the proposal of UPike, which is in the state's easternmost county, while 25 would be covered by the plan of Cumberlands, which is in Williamsburg along Interstate 75 near the Tennessee border. (Read more)

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