Kentucky rules out raising coal taxes

Kentucky Gov. Steve Beshear and the legislature could find themselves wrestling this summer with a $1 billion state budget shortfall. But there's one option the politicians say they will not consider: higher coal taxes.

Kentucky hasn't touched its coal severance tax rate or its mine permit fees in about 30 years, while other taxes and fees gradually increased and other coal states asked the mining industry to contribute more. Tennessee lawmakers, for instance, sent a bill to their governor April 24 hiking that state's coal severance tax from 20 cents a ton to $1 a ton over four years. But few at the Kentucky Capitol expect such action here, no matter how painful the spending cuts that might be coming.

While Beshear says it's too early to discuss specifics, the House and Senate budget chairmen this week said coal is off-limits. They, and the Kentucky Coal Association, warned that raising coal taxes would discourage mining in the state and eliminate jobs.

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