Eastern Kentucky needs a strategic plan to diversify its job base and money to make the plan a reality as its coal industry withers, according to a regional economic development organization.
In a paper released Monday, the Mountain Association for Community Economic Development called on legislators to set up a body that could create a plan to boost Eastern Kentucky's economy and oversee its implementation.
Eastern Kentucky has lost more than 5,700 coal jobs in the last two years, creating a critical need for better planning to develop the region's economy, the report said.
"Literally ever single person we've talked to said we've got to do something else," said Justin Maxson, president of MACED, which is based in Berea and funds projects in Eastern Kentucky.
The Eastern Kentucky coal industry has been buffeted by a number of factors.
Many local people blame federal environmental and safety rules, though a number of analysts have said the very low price of natural gas — a competing power-plant fuel — has been a more immediate factor in the sharp drop in coal production and jobs in the region. The cost of mining in Eastern Kentucky also outstrips that of other coal-producing areas.
One option to fund a new strategic plan for the area would be to set aside 25 percent of the money the state collects from a tax on mined coal, the report said.
Some of that money could be used right away to put the plan in place, and some could be set aside in a permanent endowment that could grow and be used for economic development going forward, the report said. Several other coal-producing states have a similar endowment.
Under that approach, a good bit of the coal-severance money would still be available immediately for other state and local needs, the report said. That will be an important point as legislators, policy makers and local officials consider the idea to create what MACED called the Appalachian Planning and Development Fund.
Counties get a share of the coal-severance tax collected by the state. That money has been an important part of the budgets of Eastern Kentucky coal counties, though the amount they get has declined as coal production in the region dropped sharply over the last 18 months.
State Rep. Leslie Combs, D-Pikeville, applauded MACED and said the state needs to consider a range of options to deal with the economic downturn in Eastern Kentucky.
But, she said, many local officials would oppose splitting coal-severance money away from their already-tight budgets.
"They've got a job to do and they're not exactly sure how they're going to do it," Combs said.
Harlan County Judge-Executive Joe Grieshop said it would hurt his county's budget to lose more severance money.
However, Grieshop also said he understands there may be a need to give up some of the money in the short run to try to improve the economy in the long run. And Grieshop said he supports the idea of coming up with a regional strategic development plan.
"Our situation will not improve without major overhaul," Grieshop said Monday.
Grieshop said he would want lots of participation from local people in coming up with any development plan for the region.
The MACED report calls for the same thing, pointing to the defunct Kentucky Appalachian Commission as an example of democratic strategic planning.
The commission grew from a task force set up in 1993 and came up with a development vision for the region.
The commission died in 2004 after Gov. Ernie Fletcher cut all its funding.
A new Appalachian commission could ensure broad participation in creating a development plan; solicit the best ideas for the region's economic transition; and promote coordination, MACED said.
A smart plan also is more likely to attract investments from the private sector and philanthropies, according to the report.
Many of the projects counties have funded with coal-severance money have been worthwhile, but they haven't been connected to any larger plan for boosting the economy of the region, the report said.
"Piecemeal projects will never be as successful as those implemented in conjunction with a wider vision for how each piece works together," the report said.
Maxson said MACED sent the report to about 200 people, including state lawmakers, local officials, bankers, community leaders and others.