Latest News

Severance-tax plan draws criticism

FRANKFORT — Gov. Steve Beshear is likely to encounter legislative resistance to his plan to use Kentucky's coal-severance tax revenue to help overcome a revenue shortfall.

Some key legislators oppose the idea, The Courier-Journal of Louisville reported Friday. Lawmakers return to the Capitol next week to begin the 2009 General Assembly.

Rep. Rocky Adkins, a Sandy Hook Democrat and House majority floor leader, says coal-producing counties should keep the money they generate.

"The money that is supposed to come back to coal counties must come back to the coal counties to make progress in resolving the needs we have," Adkins said.

Kentucky faces a projected $456 million revenue shortfall in the current fiscal year that ends June 30. Beshear has proposed offsetting the budget hole by raising the state's cigarette tax 70 cents per pack, to a total of $1, and cutting many government agency budgets by 4 percent.

Beshear has also proposed using $17.4 million in coal severance tax revenue to help. But House Speaker Jody Richards and state Rep. Greg Stumbo, who is challenging Richards for the top leadership spot, both say they're against the idea.

Others say the plan is fair and would still allow coal counties to keep what they've already been promised, and an extra $20 million.

"Everyone will have to sacrifice at least a little to balance the budget, and this is not a tremendous amount of sacrifice given the other cuts that will be made," said Rep. Jim Wayne, a Louisville Democrat. "The reality is that the urban areas, which help support rural areas, are hurting, too."

Beshear spokesman Jay Blanton says the governor is open to changes in his budget proposal.

"The governor has said from day one his proposal is a starting point," Blanton said.

Money from the tax is split, with about half of it going to counties that produce coal and the rest to fund other areas of the state budget.

Kentucky's coal severance tax has produced more money this year than lawmakers expected because of higher coal prices and increased production.

Pike County Judge-Executive Wayne Rutherford said Beshear's proposal is unfair.

"That belongs to us," Rutherford said. "Our miners mine the coal. We already keep Kentucky warm in the winter. We keep the lights on. We deserve it."