Report: Coal industry costs Kentucky more than it pays in taxes

FRANKFORT, Ky. — The coal industry takes $115 million more from Kentucky's state government annually in services and programs than it contributes in taxes, according to a study to be released Thursday.

The Berea-based Mountain Association for Community Economic Development, or MACED, spent a year examining the coal industry's impact on the state's general fund and road fund.

"The coal industry is pretty free about discussing the positive impact of coal on the state. But there's almost no public discussion about the cost," said MACED President Justin Maxson.

Bill Caylor, who lobbies Frankfort for the Kentucky Coal Association, said he didn't know about the study and thus had no specific rebuttal, but he's sure it's inaccurate. The coal industry contributes plenty and is the largest private employer in some Eastern Kentucky counties, Caylor said.

"I've got a lot of choice words that I could offer on this, but it would sound pretty bad," Caylor said. "It's voodoo economics."

MACED is a nonprofit organization focused on developing economic opportunity in Central Appalachia. It periodically issues policy studies, and with an affiliate, it makes several million dollars in small-business loans.

In its latest study, MACED determined that coal delivered $527 million to the state in 2006, mostly through coal severance, corporate income, sales and vehicle taxes, plus taxes on 17,903 people employed in mining and 52,429 people in jobs that depend on mining.

The same year, MACED said, the coal industry cost the state $642 million.

This includes $239 million for frequent repairs to about 3,800 miles in the coal-haul road system, where trucks weighing up to 120,000 pounds crush the pavement as they carry coal from mines to tipples, trains, barges and power plants. Companies purchase state decals for the right to run coal trucks overweight, but that revenue offsets very little of the cost of road repairs.

Unknown to most taxpayers, MACED said, the state also gives the coal industry a variety of tax breaks, subsidizes the regulatory agencies that deal with its impact and even pays for pro-coal materials through a "coal education program" aimed at schoolchildren.

The severance taxes and mine permit fees the industry pays Frankfort to cover its costs have not increased in about 30 years. Of top coal-producing states, Kentucky gets the least from severance taxes — 2.9 percent of its tax income, compared with 7.1 percent for neighboring West Virginia.


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