Whitesburg KY
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Backroom budget not good for state

Hope and cynicism are running neck and neck in the race to give eastern Kentucky a better future.

Cynicism surged when Gov. Steve Beshear and U.S. Rep. Hal Rogers named a SOAR leadership team that looks more like guardians of the failed economic and political order than wellsprings of change and imagination.

But then the Republican Senate drove the legislature into a surprise move by blocking its usual severance-tax spending spree, thus preserving $15 million for possible job creation.

Don’t get too excited. Local elected officials could still fritter away the $15 million.

And overall the legislature made no attempt to transform severance tax spending into a coherent economic strategy. That’s something lawmakers must do soon if Shaping Our Appalachian Region is going to make it past the first turn.

The severance tax, which is expected to generate $200 million each of the next two years, is levied on coal and other extractive industries to compensate for the severing of non-renewable resources. Some states have stashed taxes from extractive industries into trust funds to seed future economic growth, but not Kentucky.

Preparing for coal’s decline as a source of jobs and revenue was the idea in the 1990s when the legislature designated half of the coal severance tax for coal-producing counties. Eastern Kentucky failed to diversify its economy, nonetheless.

Too much of the tax revenue that was supposed to create a postcoal economy still subsidizes the coal industry through everything from coal-haul road repair to training mining engineers.

And then there are the goodies handed out by lawmakers, popular amenities that do nothing to create jobs. In the just ended session, the House earmarked severance revenue for an American Legion Post, a chess team, volunteer fire departments, senior citizens centers, on and on for pages.

But, at the Senate’s insistence, the budget was largely stripped of such earmarks. That means that $15 million in coal severance money is available to local governments.

By law that money is reserved for industrial development, but, as usual, lawmakers stipulated that it can be used for just about any non-recurring expense as long as the Department for Local Government or the Kentucky Infrastructure Authority concur.

We don’t argue with bringing water lines and sewage treatment to eastern Kentucky, but the Department for Local Government should closely vet other proposals to be sure they have the potential to create employment.

Meanwhile, the legislature did give SOAR $200,000 for administrative expenses and $2 million a year for a Regional Strategic Development Fund, both from severance revenue.

The legislature also approved $60 million in bonds to improve high-speed Internet, beginning in the mountains, which will be augmented by $10 million from the federal Appalachian Regional Commission.

Despite those hopeful signs, it’s going to take effort to overcome the doubts created by some of Beshear’s and Rogers’s appointments.

Lexington public relations executive Phil Osborne, whose lucrative work for the coal industry chilled discussions about economic alternatives, is chairing the working group on tourism, natural resources, arts and heritage.

He will have to work hard to earn the trust of people who doubt that tourists are looking for a coating of coal dust or water that’s orange from mine runoff.

Also disappointing is the absence of a working group on energy efficiency, which was widely touted at the SOAR summit in Pikeville in December. Retrofitting homes and businesses to make them more energy efficient could put people to work immediately while paying dividends for decades.

But this race is long, and SOAR is barely out of the gate. Its leaders may have to leave their comfort zones to create a democratic, inclusive process for decision-making.

But that’s the only way to live up to Beshear’s repeated declarations that ultimately the people of the region must fix the region. Kentuckians should not hesitate to muscle their way into SOAR’s strategy sessions and decision-making.

— The Lexington Herald-Leader

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