Magistrates approved sharp cuts in Knott County's budget Wednesday to compensate for a projected shortfall of $1.2 million in coal-severance tax revenue.
The spending cuts will mean significant layoffs, Deputy Judge-Executive Greg Mullins said.
The Kentucky Department for Local Government had said the magistrates had to approve a plan to balance the county's budget by Wednesday or face being put under court order to do so, Mullins said.
Eastern Kentucky coal counties have seen their severance revenue decline since mid-2012 as coal mining in the region slumped.
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Coal production in Knott County dropped 45 percent from 2011 to 2012, torpedoing its budget.
Magistrates last week rejected proposals to adopt a 1 percent occupational tax and make payroll cuts.
On Wednesday, the fiscal court voted 3-1 to authorize Mullins to draw up a revised budget that achieves the necessary cuts without an occupational tax. Magistrates will vote on the plan later.