At summit, Eastern Kentucky leaders look to Minnesota for ideas to renew economy

bestep@herald-leader.comDecember 9, 2013 

PIKEVILLE — Leaders grappling with a painful downturn in coal jobs in Eastern Kentucky got a primer Monday on how another state dealt with a similar collapse in its mining region.

The situation 30 years ago in the iron-ore belt in northeastern Minnesota was dire.

Mining jobs dropped by more than 60 percent in 18 months and people started moving out, at times stopping by the bank on the way out of town to drop off keys to houses and cars they couldn't pay for, said Joe Sertich, a former community-college president in the region known as the Iron Range.

The Eastern Kentucky coalfield has been similarly battered by layoffs. The coal industry has cut 6,000 jobs since mid-2011, with some counties losing more than half the jobs that were once the bulwark of their economy.

Sertich spoke Monday at a daylong summit in Pikeville called Shaping Our Appalachia Region, or SOAR. U.S. Rep Hal Rogers, R-Somerset, and Gov. Steve Beshear, a Democrat, set up the summit to generate ideas to diversify the economy of Eastern Kentucky.

About 1,700 people registered for the summit at the Eastern Kentucky Exposition Center — evidence, Beshear said, of the tremendous interest in trying to find some way to revitalize the regional economy.

"The situation has reached a critical point," Beshear said in opening the meeting.

The Iron Range had some things in place to deal with its downturn that Eastern Kentucky doesn't, however.

One was the Iron Range Resources and Rehabilitation Board, which is headed by Sertich's son, Tony, a former Minnesota state lawmaker who also spoke at Monday's development summit.

The state had set the board up in the 1940s to promote investment and workforce development in its iron-ore region, so when the industry shriveled there was a panel in place to help guide a response.

The panel paid for short-term public-works projects to cushion the blow of mining losses — helping stem the population loss — then invested in longer-range efforts to attract new businesses and boost tourism and other sectors, Tony Sertich said.

Planners also brought better coordination to community colleges in the region and put more focus on technical education and training.

Sertich said the long-term effort has been successful. The unemployment rate in the region is about 6 percent, and there has been nearly $500 million in public and private investment in the region since 2010, which is projected to create more than 4,100 jobs, he said.

Several Eastern Kentucky coal counties had unemployment rates well above 10 percent in October, preliminary figures showed, with Leslie County topping the list at 18 percent.

Another difference is that the regional board in Minnesota, which is funded by a tax on mining, had set aside some of the tax money in a trust fund to pay for future work.

Kentucky also has a severance tax on mining, but state and federal governments spend all of it annually. Several groups have called recently for Kentucky to begin setting aside some coal-severance money in a permanent endowment.

Also, in Minnesota, most of the mineral tax stays in the region where the ore is mined, Sertich said. Local officials in Kentucky have long complained that too much of the money derived from coal in their counties never comes back.

A roomful of people in one session Monday on tourism development applauded when Fred James, with the Prestonsburg Tourism Commission, said coal-producing counties should get 100 percent of the coal severance tax.

Beshear, however, said at a news conference that the state's next budget will be stretched thin, "so we can't be fooling" with the division of coal-severance money between the state and counties.

The Pikeville conference included sessions where people could give ideas on creating jobs in tourism and health care, helping entrepreneurs, and improving education and infrastructure, among other things.

Participants suggested scores of ideas — everything from the traditional approach of trying to recruit manufacturing jobs to regional industrial parks, to supporting cultural initiatives, building more substance-abuse treatment centers and expanding early-childhood education.

The challenge will be to sift through the ideas, align them into a well-planned strategy and find money to make it work, said Justin Maxson, president of the Mountain Association for Community Economic Development.

"What matters is what happens next," Maxson said. "We heard some good ideas, but they weren't necessarily new ideas, and I'd like to know how they're going to be implemented."

The Rural Policy Research Institute, which helped coordinate the event, has been hired to produce a report within 30 days that incorporates ideas from the SOAR initiative. Beshear said he and Rogers will then announce a public-private organization to act on the ideas.

Beshear said there will be some state money for the public-private board, as well as money for expanded broadband and to widen the Mountain Parkway to four lanes throughout its length.

Rogers said he is determined not to see the initiative end in yet another study to be put on a shelf.

"We are here to come up with a plan for action," he said.

Still, long-term funding to make that plan a reality is a big question mark.

Manchester Mayor George Saylor said a lot of good ideas surfaced, but "it's going to boil down to money."

Others said there are significant things that can be done without a lot of new federal or state spending, however, such as better regional communication and collaboration on a number of fronts.

"We've got a lot of existing resources," said state Sen. Robin Webb, D-Grayson.

The need to diversify the region's economy will only become more urgent during the next few years, said former Gov. Paul Patton, who moderated one session.

More than 30 power plants that bought coal from Eastern Kentucky this year are set to close by 2018, Patton said.

"We have not lost all the jobs we're going to lose," he said.

Josie Whelan illustrated what is at stake in the effort to transform the region's economy.

The 19-year-old Lawrence County native, who studies environmental science and education at the University of North Carolina-Asheville, said she wants to be a "boomerang," a word frequently invoked Monday to describe a bright resident of the region who moves away, gets outside world experience, and then returns home.

But Whelan said she doesn't know if there will be a place for her.

"I knew kids who grew up saying, 'Yeah, I'll just get a government check' because they felt they had nothing else to look forward to,'" Whelan said after a panel on youth engagement. "I'm really scared of coming back to a ghost town ..."

The situation in Eastern Kentucky may look bleak, but the downturn also brings an opportunity to unite the region and make long-lasting changes for the better, said Tony and Joe Sertich.

"Don't waste this crisis," Joe Sertich said. "Now is the time to forget about that football game that somebody won or lost a decade ago."

Bill Estep: (606) 678-4655. Twitter: @billestep1.

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