Facing cuts in yearly revenues of more than $1 million, the Letcher Fiscal Court is being asked by Judge/ Executive Jim Ward to reduce the amount of money it spends to fund law enforcement, garbage collection and meals and activities for senior citizens.
Ward told court members this week that the amount of money the county government contributes to the Letcher County Senior Citizens Program, the Letcher County Sanitation Department, and Letcher County Sheriff ’s Department will have to be cut considerably. Ward said the cuts are painful but necessary to prevent Letcher County from experiencing the problems at the end of the next fiscal year (June 30, 2014) that are currently causing layoffs and other financial problems for neighboring Pike and Knott counties.
The $9.7 million budget Ward is proposing for the fiscal year that begins July 1 is $1.017 million lower than last year’s budget of $10.7 million and reflects cuts of $150,000 each to senior citizens and sanitation, and a cut of $85,000 to the sheriff ’s department. The budget leaves $100,000 in the sheriff ’s appropriation for retirement and health insurance.
Ward said that even with the reduced budget, the going would continue to be extremely tough unless severance tax revenues unexpectedly rise for coal and natural gas.
While coal production remains strong elsewhere in the U.S. and even in other parts of Kentucky, it has fallen dramatically in much of southeastern Kentucky, causing severe cuts to coal-county government budgets as a result. Once one of the state’s largest coal producers, Letcher County saw its production tumble from 10.6 million tons in 2001 to 4.4 million tons in 2011, a total reduction of 59 percent. The situation grew even worse in 2012, when Letcher County’s coal production fell to a modern-day low of 2.97 million tons, a drop of 36 percent from the year before.
To make the financial picture even worse, the short-term and long-term outlook for coal production here grew even more dim this week with the release of a lengthy study Tuesday that lists Letcher County as one of only three eastern Kentucky counties that are “highly vulnerable” to further cuts in production. According to the new study, titled “The Continuing Decline in Demand for Central Appalachian Coal: Market and Regulatory Influences” and prepared by Downstream Strategies of Morgantown, W.Va., the other two counties likely to experience the greatest declines in production are Pike and Knott.
The report identified the challenges facing Letcher and surrounding counties as depletion of the region’s most productive coal reserves, declining labor productivity, higher costs of mining the harder-to-reach seams that remain,further cuts in coal-generated electricity, and increasing competition from other coal basins, such as the Powder River Basin in Montana and the Illinois Basin that includes western Kentucky. The region’s coal industry will also face continued competition from cheap natural gas and renewable energy technologies, the report said.
District Five Magistrate Wayne Fleming asked Ward about the effects of the cuts in funding for the senior citizens program. Ward said that while no services will be reduced, there will be no extras. He said he has already been working with Senior Citizens Director Trenda Kincer to cut costs and that several such measures have already borne fruit. Ward said that purchasing for the centers has been centralized, which reduced costs considerably.
Fleming also questioned cuts to the sheriff’s department and said he hopes it won’t cause a cutback in deputies. Ward said the only way to avoid the cuts would require taking money from other departments, adding that all other county agencies are already on very tight budgets. Ward said he didn’t go over the proposed budget cuts with Sheriff Danny Webb before Monday’s meeting but expects to do so soon.
County Treasurer Phillip Hampton said the figures in the budget are projections and are largely dependent on tax collections.
“We’ll have to see how things play out, 2013-2014 will be a trying year,” said Hampton. “Everybody will have to cut back. It will get really tight.”
Ward said some savings should come from lower interest rates on two loans for county buildings. The court took action at its May meeting to refi- nance a loan for the 1990s reconstruction of the Letcher County Courthouse from the U.S. Department of Agriculture through the Kentucky Association of Counties. By refinancing at current rates, the court will lower the county’s interest rates from 4.75 percent to around 2.8 percent. The interest rate for the county recreation center will also be cut by almost a point.
Ward said once the budget is approved by the state and is read for a second time in a public meeting, he will go over it “line by line” with each department head to make sure he or she understand the severity of the situation facing the county. He said he wants everyone to understand there will be no extra money. Hampton added that the last thing anybody wants is to be faced with laying off county workers.
“It’s probably the most difficult budget I’ve ever put together,” said Hampton. “There can be no overtime or excessive spending, but at least we aren’t in the news for layoffs or making major cutbacks.”