This news story originally provided by
The Lexington Herald-Leader
January 10, 2005
Raise coal severance tax, E. Ky.'s share
RATE TOO LOW; MOUNTAIN AREA GETS TOO LITTLE
By Erik Reece
I spent the last two years writing a book about strip-mining in Eastern Kentucky. It has been an education.
I've seen trailers so damaged by mine blasting that you can't set a glass on the kitchen table without it sliding off.
I've seen miles of streams buried under the spoil created by mountaintop-removal mining, and I've seen miles of streams running acid-orange from mine drainage.
I've seen whole communities nearly washed away by flash floods that pour down hollowfills like water through a funnel.
I've seen homes that sit so close to unreclaimed hollowfills that a strong storm and a mudslide could instantly bury all who lived there.
I've been to Martin County and seen the sludge that still lines the bottom of Coldwater Creek four years after a coal slurry impoundment broke and flooded the valley with its toxic black waves.
It is not news that people in the coalfields have problems that are the result of an extractive industry that has taken much from the region and given little back. This year, Gov. Ernie Fletcher says he will push for long-overdue tax modernization in Kentucky. As the Kentucky General Assembly reconvenes this month, I urge its members to do something very basic and very substantive: raise the coal severance tax and redirect more of that money to the counties most affected by strip-mining.
The tax, established in 1976, charged 4.5 percent on each ton of mined coal. Almost 30 years later, that rate hasn't changed, but the damage caused by mountaintop removal has increased drastically. Wyoming and West Virginia, the only states that mine more coal than Kentucky, have severance taxes set at 7 percent and 5 percent respectively. I urge the state legislature to split that difference and raise Kentucky's coal severance tax to 6 percent.
Over the past year, the price per ton of coal has jumped from $34 to $55. The companies can certainly afford a modest increase in the severance tax. More than half of the tax now goes into a general fund to be spent on projects such as the renovation of Lexington's civic center. This is simply unfair.
While the coal industry likes to tout its ability to create jobs in the region, the poorest counties in Kentucky are the ones that have seen the most strip-mining. Therefore, a much higher percentage of the coal severance tax should be returned to those counties to repair homes and streams, and to create good, sustainable jobs.
Over the last two decades, $70 million of the severance tax has gone toward building eight industrial parks across Eastern Kentucky. These have not been a success. The Coalfields Industrial Park in Hazard is almost empty. And $8.5 million was spent on the Bluegrass Crossing Regional Industrial Park, which today has one tenant that employs 35 people making air bags. Unless each of those employees is making $245,000 a year and pouring it back into the community, that was not money well spent.
Multinational companies have come to these industrial parks, then moved on to places like El Salvador, where labor is even cheaper than in Eastern Kentucky. If globalization has not brought prosperity to the mountains, perhaps it is time to consider its opposite: a regional economy. I wonder how different Eastern Kentucky would look today if those subsidies had gone to local people, local businesses and local cultural institutions.
The mountains of Kentucky are not bereft of tradition -- far from it. Just give a listen to the title track of Loretta Lynn's great new album, Van Lear Rose, to understand how art can come from hard times and can give them meaning and beauty.
But since C.C. Mayo began buying up mineral rights in the 1880s, the mountains and the people of Eastern Kentucky have been exploited and treated poorly so the rest of us could have cheap electricity.
It is time the coal industry and the rest of Kentucky understood
that sacrifice and started paying back a debt that is long overdue.