Coal industry’s decline means less tax money for school districts

Kentucky Education Commissioner Stephen Pruitt.
Kentucky Education Commissioner Stephen Pruitt. File photo

A decrease in unmined mineral assessments will have a significant impact on at least 12 school districts, mostly in Eastern Kentucky, and their local tax revenue generated from the tax on coal assessments, Kentucky Commissioner of Education Stephen Pruitt said Wednesday.

“We’ve got some districts that are going to be really struggling,” Pruitt said at the Kentucky Board of Education meeting. “I frankly don’t know what some of them are going to do. They’ve already dipped into the contigency funds to be able to keep the lights on in some cases.”

The estimated loss in unmined mineral tax revenue for those districts is, at a minimum, $4.3 million, according to Pruitt. Knott County Schools is estimated to lose $1 million, he said.

In addition to Knott, school districts in Bell, Breathitt, Floyd, Harlan Hopkins, Leslie, Letcher, Martin, Perry, Pike and Union counties are estimated to see losses of more than $100,000, state officials said. Pike County’s school district loss is estimated at $745,000.

The Department of Revenue’s preliminary unmined mineral assessments have declined 43 percent from the prior year, or $955 million, Pruitt said. Also, the number of active mines has declined from 647 in 2006 to 184 in 2016.

The impact could be even greater than what is estimated. Revenue officials told Department of Education staff that some of the taxpayers with unmined mineral property were protesting the valuations.

The protest essentially allows the taxpayer to dispute the value and provide the Department of Revenue with more information that may lead to a lower final unmined minerals assessment and less tax revenue for the school districts.

Pruitt said state Department of Education officials are offering to help local school officials adjust to the loss of local revenue.

Greg Conn, finance director for Knott County schools, said officials hope the state will give the district extra money to help make up for the shortfall.

If that doesn’t happen, the district will be forced to cut jobs next school year because it can’t absorb the $1 million loss, Conn said.

“We’ve got a task ahead of us,” Conn said. “We got hit harder than anybody.”

Staff writer Bill Estep contributed to this article.

Valarie Honeycutt Spears: 859-231-3409, @vhspears