Federal tax credits proposed to create jobs in E. Ky. coal areas

This Jan. 14, 2013 file photo shows House Appropriations Committee Chairman Rep. Hal Rogers, R-Ky. on Capitol Hill in Washington.
This Jan. 14, 2013 file photo shows House Appropriations Committee Chairman Rep. Hal Rogers, R-Ky. on Capitol Hill in Washington. Associated Press

A proposal introduced Wednesday in Congress would boost efforts to create jobs in an eight-county area of southeastern Kentucky where the economy has been rattled by a sharp drop in coal employment.

The bill, if passed, would create tax credits for hiring workers and speed up tax depreciation on certain business items in the counties in a designated federal Promise Zone.

The counties are Harlan, Bell, Letcher, Perry, Leslie, Clay, Knox and much of Whitley.

Republican U.S. Rep. Hal Rogers introduced the legislation with three other members of the House — one Republican and two Democrats.

President Barack Obama designated the Promise Zone in January 2014. It was among the first five zones established under one of the administration’s key efforts to improve conditions in high-poverty areas.

The designation does not set include specific funding, but it gives the zone priority in getting federal money for education, job training, housing and other needs.

Many federal agencies award grants competitively. The Promise Zone designation means projects in the Kentucky counties get bonus points in the evaluation process.

Obama also proposed tax credits for the zones, but Congress didn’t approve that.

The Promise Zone designation has figured in tens of millions in funding, but it hasn’t provided as much punch as hoped without tax credits.

The White House proposed the credits to provide an incentive for businesses to set up shop and expand, said Jerry Rickett, president and CEO of Kentucky Highlands Investment Corp.

“I believe that the unavailability of tax credits has limited our Promise Zone counties in that regard,” Rickett said Wednesday.

Business tax credits worked to boost jobs in three Kentucky counties under the earlier federal empowerment zone program, Rickett said. That program covered Jackson and Clinton counties and part of Wayne County.

The communities “were able to attract significant outside business locations and the expansion of existing businesses” because of tax credits under the program, Rickett said.

Kentucky Highlands managed the empowerment zone and is coordinating the Promise Zone program.

Greg Drury, owner of The Portal, a pizza restaurant in Harlan, said tax credits would help him expand his business.

Drury’s idea is to set up a shop in Harlan to make ingredients including dough and sauces for his Harlan restaurant and one he owns in Richmond, and for others he wants to open in Eastern Kentucky.

The Harlan restaurant employs about 15 people, but creating a supply operation in town would create more jobs, Drury said.

“It would be extremely beneficial for us if we could get those tax credits,” he said.

Rogers introduced the bill with U.S. Reps. John B. Larson of Connecticut and Steve Cohen of Tennessee, both Democrats, and Republican Joe Wilson of South Carolina.

The bill would “encourage new businesses to establish roots in the coalfields, where they will find some of the hardest-working, dedicated work forces in the country,” Rogers said in a news release.

Sen. Bob Casey of Pennsylvania, a Democrat, introduced a similar tax-credit bill earlier, but the Senate didn’t approve it.

Under the bill introduced Wednesday, employers would get tax credits of as much as 20 percent on the first $15,000 of qualifying employees’ wages. The bill also would allow first-year depreciation of 100 percent of the adjusted basis of certain property.