An agency that pumps millions of dollars each year into economic development in Eastern Kentucky and other Appalachian states would lose federal funding if President Donald Trump’s proposed budget prevails.
Trump would help pay for increased military spending and a U.S.-Mexico wall by eliminating money set aside for several independent agencies financed by the government, including the Appalachian Regional Commission.
The agency, which covers all or parts of 13 Appalachian states, has been a conduit for hundreds of millions in aid to Eastern Kentucky since it was founded in 1965, when poverty rates exceeded 50 percent in some counties and much of the region lacked adequate water, highways and health care.
The ARC has spent more than $23 billion in Appalachia since then on a wide range of programs and projects to tackle the region’s woes.
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Between October 2015 and January 2017 alone, the ARC supported 63 projects in Kentucky totaling $31.9 million, the agency said Thursday. That spending, which has been matched by more than $65 million in other aid, is projected to create or retain more than 1,200 jobs and provide education or workforce training to more than 2,300 people in the state’s 54 ARC counties, the agency said.
Some Eastern Kentucky officials on Thursday said it would be a mistake to cut ARC funding as the region struggles to diversify its economy in the face of a sharp downturn in coal jobs, which plummeted from 13,579 in 2011 to 3,742 at the end of 2016.
“We’re already down. There’s no need for them to step on our neck,” said Floyd County Judge-Executive Ben Hale, a Democrat.
The ARC has been a key player in those efforts to broaden the economy.
For example, ARC made a $1.8 million grant last year to a proposed wildlife center in Bell County that U.S. Rep. Hal Rogers and Gov. Matt Bevin, both Republicans, touted as a future signature tourist destination. The agency also provided $2.75 million last year for a program that helps train former coal miners to become computer coders. And it was one of two agencies that provided a combined $7.5 million last year for equipment and supplies to get the University of Pikeville’s College of Optometry going.
There were indications Thursday that it’s too soon to write the ARC’s obituary.
Rogers, who represents most of the state’s ARC counties, said that while there is a need to cut the federal deficit, he was disappointed that many cuts proposed in Trump’s budget “are draconian, careless and counterproductive.”
He mentioned the ARC in particular, saying it has had a long history of bipartisan support “because of its proven ability to help reduce poverty rates and extend basic necessities to communities across the Appalachian region.”
“Today, nearly everyone in the region has access to clean water and sewer, the workforce is diversifying, educational opportunities are improving and rural technology is finally advancing to 21st Century standards,” Rogers said. “But there is more work to be done in these communities, and I will continue to advocate for sufficient funding for ARC and similar programs, like the Economic Development Administration.”
Trump also proposed ending the EDA, which routinely makes grants in Kentucky.
Rogers’ office noted that while he led the House Appropriations Committee from Fiscal Year 2013 through FY 2016, Congress provided $91 million more for the ARC than then-President Obama requested, reflecting support for the agency on both sides of the aisle.
Rogers said he was optimistic Congress will work with Trump to “responsibly” fund the government, including agencies that serve as “vital economic lifelines” in struggling rural areas.
In November, U.S. Senate Majority Leader Mitch McConnell said he supports the efforts of the ARC, though it alone could not revitalize Eastern Kentucky.
“A government spending program is not likely to solve the fundamental problem of growth,” McConnell said at the time. “… I support the effort to help these coal counties wherever we can but that isn’t going to replace whatever was there when we had a vibrant coal industry.”
When asked about funding for the ARC Thursday, McConnell didn’t answer directly.
“I’m pleased to see an increased focus on our national security and veterans budgets,” McConnell said. “These are positive steps in the right direction. I look forward to reviewing this and the full budget when it is released later this spring. While this is only the first step in the budget process, I will work with the delegation to protect essential Kentucky priorities in the final budget.”
The agency itself declined to comment on Trump’s budget request.
Eastern Kentucky voted heavily for Trump in November, in part because of Trump’s promise to put coal miners back to work. And while Trump’s administration has taken steps to remove some regulations on the coal industry, experts say those changes will have little impact on coal production in Eastern Kentucky.
For example, the U.S. Energy Information Administration projects that without Obama’s signature plan to cut carbon dioxide emissions from coal-fired power plants — which the budget would eliminate — there will be a slight increase in Central Appalachian production from 52 million tons this year to 70 million in 2022, followed by a long gradual decline to 35 million in 2050.
ARC has been targeted before, with critics citing it as an example of wasteful, inefficient or politicized government spending.
President Ronald Reagan tried repeatedly to kill it, saying in his 1985 budget statement that such regional development programs “serve no national economic purpose but instead cater, at taxpayer’s expense, to local and regional political interests,” The New York Times reported then.
With the backing of local officials and members of Congress spread across 13 states, however, the agency has survived, albeit with significant cuts at times.
Kentucky journalist Al Smith, who was federal co-chairman of the ARC for one year under President Carter and two years under President Reagan, said he thinks the future of the ARC is “relatively safe.”
“Senators and U.S. representatives in the 13 states will not let it get hurt,” Smith said. “McConnell takes great pride in his work with the commission. He will keep dollars there.”
Smith said he “never met a county judge or mayor who would give back an inch of road, money for hospitals and clinics and other worthwhile projects.”
Hale, the Floyd County judge-executive, said the federal agency has helped spread water service to more than 90 percent of county residents, up from a level he estimated at 15 percent in the 1960s.
The agency targets extra money and services to so-called distressed counties with high unemployment, low incomes and high poverty. Kentucky has the largest concentration of such counties of any Appalachian state — 37 in fiscal year 2017.
Overall, the number of high-poverty counties in Appalachia has dropped from 295 in 1960 to 84 in fiscal year 2017 because of work by the ARC and other programs, the agency said Thursday.
Hale and others said there is still more work needed, however. The poverty rate in many Eastern Kentucky counties is less than half what it was in the mid-1960s, but remained at 25.4 percent from 2010 through 2014, compared to 18.9 percent statewide and 15.6 percent in the U.S., according to the ARC.
The agency’s current budget, $146 million, is the largest in decades, increased in order to help deal with the collapse of the coal industry in Central Appalachia.
In addition to targeting the ARC, Trump’s proposed budget would reduce or eliminate other funding that has an impact in Kentucky. For instance, it would reduce payments counties get in lieu of taxes on federal land; cut U.S. Department of Agriculture staff to “streamline” county offices; end the Low Income Heating Assistance Program; and eliminate the Legal Services Corporation.
The LSC provides half the funding for the Appalachian Research and Defense Fund of Kentucky, which provides free civil legal help in matters such as housing, veterans benefits and domestic violence to poor people in 37 counties.
APPalReD would have to cut services if the proposal goes through, said Robert Johns, the executive director.
“Obviously it would have a devastating effect,” he said.