Severance taxes in E. Ky. drop with coal output

Coal's popularity as an energy source decreased sharply last year as natural gas became more plentiful and cheaper, and because of increased federal regulations requiring costly upgrades to coal-fired power plants. The decline in production has forced mine closures and layoffs in the Central Appalachian coalfields, and some Eastern Kentucky counties are dealing with million-dollar budget shortfalls as the amount of coal severance tax they receive is dropping.(Lexington Herald-Leader photo: Arch Coal processing facility in Knott County)

 Kentucky shares its severance taxes with local governments in producing areas. Statewide coal tax receipts fell 19 percent in the final quarter of last year, and an additional 19.1 percent over the next three months, according to the Governor's Office for Economic Analysis. Some counties could be forced to make layoffs and tax increases as a result, Bill Estep and John Cheves of the Lexington Herald-Leader report. The Knott County Fiscal Court formed a committee last week to suggest about how to deal with the county's projected $1.2 million loss in budgeted coal-severance money. Adjoining Letcher County has cut overtime for county employees and has placed a hold on spending to manage a $1 million shortfall. Estep and Cheves report that in the 10 Eastern Kentucky counties that produced the most coal in 2011, production was down in 2012 by 29 percent, with the drop being steeper in some counties, including Martin, Knott and Letcher. (Read more)